Constellation Automotive Group – whose brands include Cinch, BCA, WeBuyAnyCar and Marshall – has recorded a deepening loss for its latest financial year.
Its newly published accounts show that it made a pre-tax loss of £140.7m for the year ended April 2, 2023 versus being £34.3m in the black the year before.
That was on revenue that slipped from £8.315bn to £6.961bn – a drop of 16%.
Once income tax was taken into account, however, the Hook-headquartered business made an £800,000 loss the previous year, and that post-tax deficit has deepened to £103.9m.
Adjusted Ebitda was down 40.1% from £336.3m to £201.6m.
In the accompanying report, signed on behalf of the board by director James Mullins, Constellation blamed ‘challenging market conditions’ for the underperformance.
The digital car marketplace said: ‘Scarcity of vehicle volumes in the market significantly suppressed activity and profitability as the group’s strength in physical assets could not be efficiently utilised.’
The directors added: ‘Challenges deriving from the ongoing war in Ukraine, both in the supply chain of new vehicles and macroeconomic implications of increased energy prices, high inflation and rising interest rates, saw the focus diverted from continuing the acceleration out of the Covid-impacted trading periods to right-sizing for conditions and protection of liquidity.’
They said the group ended the year with liquidity standing at £271.4m, up from £247.1m the previous year, thanks to ‘a combination of reduced inventory holding and actions taken following a property review’ – a reduction of its retail-ready estate to what it called ‘a size more appropriate for near-term production’.
Constellation said its UK vehicle remarketing division underperformed, with an adjusted Ebitda down by 36.4% to £87.8m from £138.1m while revenue was up 11.8% to £2,901.7m from £2,596.2m.
The drop in adjusted Ebitda was caused by ‘significantly reduced auction entry volumes and higher unabsorbed overheads caused by overcapacity in retail operations’, said Constellation.
WeBuyAnyCar provided 491,000 vehicles for auction customers, said Constellation, but the remarketing division operated at about 60 to 70% capacity for the first three-quarters of the financial year, which hit operating leverage, efficiency and profitability.
Auction volumes fell by 15% to 950,000 units from 1.1m.
It added that growth in demand for retail-ready vehicles had slowed during the year, which led to excess refurbishment capacity and unabsorbed production overheads to the tune of £11.7m for the year.
Meanwhile, the cost-of-living crisis impacted on market demand and consumer preferences, so that previously chosen vehicles became less favourable for refurbishment.
Constellation said this was made worse by disruptions to supply chain ‘that extended lead times for parts and paints, leading to total out-of-programme vehicles costing £11.1m’.
And although there were lower auction volumes, the division saw costs rise during the year.
WeBuyAnyCar volumes fell by 13% to 491,000 units versus 565,000 the year before, although Constellation said it was still ‘significantly up on the largely pre-pandemic FY20’, having grown by 169,000 units (53%). Corresponding revenues were up by 152.2% to £2,119.3m.
It added: ‘With increasing economic uncertainty during the year, WeBuyAnyCar targeted vehicle-buying to match auction demand, focusing on lower-value vehicles.’
That saw average revenue per vehicle fall to £7,100 from £9,100 the previous year.
The highest-paid director earned £1.2m for the year – down 71% on the previous year’s £4.1m.
As of April 2, 2023, the group held net cash and cash equivalents of £96.4m, versus £77.1m the year before.
In the report, the group said it had always appreciated long service, which showed that it was ‘a thriving place to work’. As of the end of its financial year, it had the following service levels and numbers:
- 40 years and more – Four employees
- 35 to 39 years – 18 employees
- 30 to 34 years – 43 employees
- 25 to 29 years – 100 employees
Under the ‘Events after the balance sheet date’ section, it stated that on April 28 this year, it sold its Rockingham car park site, pictured, for £22.9m.
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