7:50 am, June 13, 2024
Motorpoint has seen its underlying pre-tax loss massively deepen from £300,000 to a whopping £8.2m.
That figure excluded various exceptional items, but when they were taken into account it widened further to a reported loss before tax of £10.4m.
In its results for the year ended March 31, 2024, which it released this morning, the used car supermarket said revenue had dropped by nearly a quarter from £1.44bn to £1.09bn because of market headwinds, stock mix and vehicle price deflation.
There had also been net exceptional pre-tax costs of £2.2m mainly because of its restructuring programme.
It all translated to a reported pre-tax loss of £10.4m – a staggering 3,367% drop – with its underlying pre-tax loss, which excluded exceptional operating expenses, exceptional other income, an exceptional finance expense and exceptional income tax income, falling by 2,633%.
Motorpoint, which has 20 stores in England, Scotland and Wales, said, however, that its gross profit margin rose from 6% to 6.7%.
Its total loss after taxation was £8.4m versus a £600,000 deficit the previous financial year – down 1,300% – which Motorpoint said was mainly caused by volume decline and the impact of high interest rates.
But it said there had been a strong improvement in cash in spite of the losses, which reflected working capital management and lower capital investment. There was also no structural debt as of March 31.
Motorpoint has suffered its most difficult financial year ever, according to its chief executive
Among its operational and strategic highlights, it said a focus on stock management, including clearing through aged vehicles, had resulted in days in stock falling by 12% to 45 days.
It also emphasised that it had returned to market share growth in Q4, stating that market share based on SMMT data for up-to-six-year-old cars for the full year was 2.1% but it had improved to 2.3% in the final quarter versus 2.2% for the same quarter in the previous financial year.
At the beginning of this year, Motorpoint issued issued a profit warning, and in April it said it was expecting to see a full-year loss.
Last July, we exclusively revealed that it had cut 60 jobs.
Commenting on the figures, CEO Mark Carpenter said: ‘The past financial year was the most difficult in our history, with multiple negative headwinds in the macro environment such as rising borrowing costs and subdued customer demand, coupled with industry specific issues such as lower inventory and deflation.
‘The resilience of our cash generation evidences the strength of our business model and we now look forward to continuing our journey of profitable growth as the improving trends of Q4 have continued into Q1.
‘Following the rightsizing exercise of FY24, we now have a lean, technology-enabled business. I am very confident in our ability to scale profitability and cash generation as the market improves, which will allow us to invest further in growth.’
It ended the year with £9.2m net cash. No dividend is proposed.
Brokers Shore Capital and Deutsche Numis – part of the Deutsche Bank Group – both said that the results were very much in line with their expectations.
Shore Capital added, though, that Motorpoint was ‘excellently placed to benefit from a return to volume growth’ and said it was ‘increasingly positive about Motorpoint’s outlook’, stating that it was looking for a return to pre-tax profitability in the 2025 financial year and beyond.
Deutsche Numis, meanwhile, said the results had ‘reflected a challenging trading environment’, adding that Motorpoint had ‘made an encouraging start to FY25’ and saying that it still believed that the used car supermarket’s shares offered ‘compelling value’.
This story was originally published at 7.50am on June 13 and updated at 9.12am the same day with the brokers’ comments.
