7:48 am, November 24, 2022
Motorpoint has posted a record set of half-year revenues and impressive growth in e-commerce earnings.
H1 results published on the London Stock Exchange this morning (Nov 24) showed the used car supermarket finished the six-month period to September 30 with revenues amounting to £786.7m.
That was up 30 per cent on the £605.2m the business made in the same period last year.
Profit before tax came, gross and operating profit all took hefty knocks however, falling by 77.8 per cent, 12.3 per cent and 60.9 per cent respectively.
Motorpoint said these falls were due to ‘increased investment relating to delivery of strategic objectives’ and to it maintaining its ‘market leading price position, against record margins experienced in H1 FY22’.
Its share of the 0-4-year-old market, however, jumped from 2.9 per cent to 3.7 per cent, and its average market share within a 30-minute drive time of a branch rose 2.2 percentage points to 9.5 per cent.
Days in stock remained the same at 50 while retail gross profit per unit nudged up by £45 to £1,373.
Motorpoint shifted 49,000 vehicles during the period, down from around 53,400 the year before, but the notable statistic was the firm’s e-commerce performance.
Revenue for online sales jumped by a massive 21.2 per cent from £289.3m last year to £350.6m.
The company said its impressive online performance showed its ‘e-commerce capability [is] established, with agile product and engineering teams rapidly improving our digital offering’.
Motorpoint has now ticked over to 19 branches with the opening of its Coventry branch in October 2022 – up from the 14 it had on its books at the end of September 30, 2021.
Looking ahead to its full-year performance and 2023, Motorpoint said it expected ‘rising inflation and interest rates, consumer uncertainty and vehicle supply challenges’ will affect its financial performance, but boasted it has a ‘strong record’ in delivering ‘financial resilience in a downturn’.
Motorpoint Group PLC CEO Mark Carpenter said: ‘I am pleased with the progress the group has made during the period, delivering record first half revenues, whilst executing on our investment strategy for growth despite increasingly difficult macroeconomic conditions.
‘Providing our customers with the best omnichannel car purchasing experience is integral to what we do, and we believe this can be achieved through investment in both physical branches and technology.
‘The ongoing success of our investment during the period is reflected in our increased market share of the 0-4 year old market and improved efficiencies across the business.’
He added: ‘We believe that Motorpoint is the best operator in the UK’s used car market.
‘It has proven its ability to grow profitably over its 25 year history and right now there is a significant opportunity for the business to grow its market share whilst remaining profitable.
‘As a result, in line with previous guidance, profitability levels will be lower as we continue to invest in our strategic agenda.
‘The investments made now will enable Motorpoint to emerge from the current macro environment in a stronger position as we seek to deliver sustained shareholder value.’
Last month, analysts Zeus Capital branded Motorpoint as ‘expensive’ and downgraded forecasts for the next three years.
The basis for the downgrades was due to Motorpoint’s ‘lower sales volumes, due to demand headwinds and continuing supply shortages, plus ongoing costs to improve the group’s digital offering’, said the firm.
Commenting on the half-year results, analysts Liberum said: ‘Difficult trading conditions from a supply and demand perspective put pressure on volumes and margins, while management has continued to make strategic investments to support longer-term growth.
‘Market share gains have been strong, providing validation of the strategy. Trading remains difficult, but we make no change to FY PBT estimates, which were cut aggressively in October.’
Shore Capital, meanwhile, said: ‘The challenges of the UK consumer economy are, we believe, now reflected in subdued forecasts over the short-medium term, albeit we also believe that strategic investment is building a platform from which the group can become a materially bigger business over the longer term.’
