The turbulent economy of 2020 saw Marshall Motor Group report a swing from a £10m loss in H1 to a £20.9m profit in their end of year results.
While group CEO Daksh Gupta said they would be firmly keeping their feet on the ground, he also pointed out that this second half result was ahead of what had been predicted for 2020 before the pandemic was even announced.
Gupta spoke to James Baggott this morning on Car Dealer Live after the results were announced.
He admitted that government support and strong pent up demand had made a huge impact on the business but that shouldn’t take away from what they had achieved.
Gupta said: ‘We’ve got to put some balance on this. We did benefit from sector tailwinds especially after the first lockdown and we did benefit from government support, which we’re extremely grateful for as an organisation.
‘That said, I really don’t want to take anything away from our team because once again they were outstanding in challenging market conditions.
‘I think from my perspective, we can’t control the market or global pandemics, our job is to outperform and we’ve done that again.
‘Despite the fact we were closed for three and a half months, revenue was only down 5.3 per cent, which I think was incredible.
‘Yes, we did benefit from our prior year acquisitions and pent up demand, but in particular the strong outperformance of the market across all key operational KPIs that underpin that performance.
- Marshall’s 2020 results in detail
- Marshall Motor Group reports a loss of £8.9m for the first half of 2020
- Marshall shocks industry as it revises profit prediction up for 2020
‘If you look at our headline metrics, in new, our performance was 10 per cent ahead of the market, within this retail like-for-like sales were 9.7 per cent ahead of the market.’
Marshall’s benefited from strong sales in September, which resulted in it needing to issue an update to shareholders about its profit predictions.
However, in this update it predicted it would make £15m profit, still nearly £6m below the final result.
In this update the Marshall boss also talked about how the company had paid its deferred VAT bill 18 months early.
Gupta did add in the interview that had it not been for £20m in furlough the business would have been in a very different position.
He said: ‘Our furlough money was around £20m so if we hadn’t had that we would have posted a small loss or near enough broken even.
‘We’re keeping our feet on the ground, yes our guys performed incredibly well but we have to admit we benefited from those sector tailwinds and that government support.’
That shouldn’t make these results to be sniffed at though, as analysts warned Gupta and his board that trying to go from the £10m loss to breakeven would be a very ambitious task.
‘I think the interesting thing was we announced our interim results on August 12 and at that stage we’d opened operations up on June 1 and we could see it was very strong, but our first half we posted a loss of around £10m,’ he said.
‘As a reference point in H2 2019 we posted a profit of £6.9m so you think, if you made that the year before you’ll still make a loss but the market is strong and there’s pent up demand.
‘We were looking at places like China where they bounced back but did any of us expect to have anything like a £30m performance. Never. Never in a million years.’
He added: ‘When I spoke to an analyst last night we talked about how at interims we said we’d go from a £10m loss in H1 to a breakeven – they said they thought it was really ambitious.
‘We thought at the time it was ambitious but that was more because of the results on August 12.
‘Our September performance was insanely strong. You might remember we did a profit upgrade at the end of September where we showed our like-for-like retail and fleet performance was up over 20 per cent ahead of the market, used was up 17 per cent, all on a like-for-like basis.
‘We could see it was strong in August but it was that September that smashed it for us.’
Baggott wanted to know if Gupta thought this was something they could build on in 2021, and the Marshall’s boss said he believes ‘it will hinge on a number of things’.
He said: ‘I’m feeling pretty positive about that because if you see the data about how much cash people have got, a lot of people have saved a huge amount of money through lockdown.’
However, he added that the strengthening of sterling is a good sign for customer incentives.
‘That’s great news for our brand partners because it makes them more competitive,’ explained Gupta.
‘That will enable them to heavily incentivise our customers, which is great news for our customers.
‘We saw what happened from 2011 to 2016 when sterling strengthened, the market just grew and grew.
‘Some people don’t like that because it’s seen as forcing the market but I personally like it because sales are good for our business.’
You can watch the interview in full by clicking play on the video at the top of the page.
- Join our breaking news WhatsApp group
- Listen to the latest Car Dealer Podcast
- List of the Top 100 profitable car dealers in the UK