Marshall Motor Group has shocked the motor industry this morning with an unscheduled announcement revising its earnings forecast UP for the year.
The listed dealer group published a notice to the Stock Market at 7am saying it expects to make £15m profit this year – a dramatic rise from its previous prediction in August that it would merely break even.
The incredible flip comes as:
- September sales performance dramatically beats market
- It pays back deferred £10.9m VAT bill 18 months early
- It proposes to shut four underperforming dealerships, but adds two
- And consultations begin to axe a small but undisclosed number of jobs
Marshall said that it achieved incredible sales figures for new and used cars in September – while the total market was down -4.4 per cent according to the SMMT, Marshall managed to post an increase in new sales of 18.4 per cent.
The dealer group dramatically outperformed the market – and rivals – across the board with new retail sales up 19.1 per cent in September.
Used car sales were up 15.7 per cent in the month compared to the same period last year.
On August 18, boss Daksh Gupta painted a conservative view for the remainder of the year and warned the dealer group faced only breaking even after the coronavirus lockdown saw it post an £8.9m loss for the first half of the year.
But now, a buoyant Gupta says ‘pent-up demand’ has seen retail customers flock to showrooms.
The dealer group is even predicting revenue for the group will only be down around 7 per cent for the year.
Gupta said: ‘Our strong culture, brand partnerships with scale, in-house technology platform and online presence, coupled with our exceptional colleagues have enabled the group to significantly outperform the wider automotive retail market through this important post-lockdown trading period.
‘While this period of positive trading has been welcomed following the significant impact of Covid-19 in the first half of the year, there remain a number of uncertainties regarding the trading environment for the remainder of the year and beyond.
‘We are also mindful that the market in Q3 was positively impacted by pent-up demand for new and especially used vehicles, which, allied to restricted supply, created favourable conditions from which the group was very well positioned to benefit.
‘It is for these reasons that we have taken appropriate actions in terms of limited business closures and restructuring measures to ensure the Group is well placed to meet these potential future challenges.’
The shock announcement paints a more positive picture for the retail motor trade and is in stark contrast to the SMMT’s dour look at new car sales in September when it posted a bleak update.
Car Dealer had been reporting throughout the month that September had looked on course to be one of the best over for dealers – and these incredible results back that up. They follow a similar set of impressive numbers from Vertu Motors, last week.
However, it’s not all good news, as consultations have begun with an undisclosed number of staff as the group proposes to shut four poorly performing dealers.
- Cambridge Hyundai
- Bury St Edmunds Ford
- Knebworth Vauxhall
- Poole Mercedes Commercial Vehicles
The sites accounted for £47.3m turnover between them but registered a £0.1m loss for the company.
The group did announce two new dealerships – with Seat being added in Oxford and Ford commercial vehicles in Kings Lynn.
The group has also decided to begin redundancy consolations with some staff who provided driving services for dealerships. Staff will be offered other roles in the company where possible.
Marshall will bring back its apprentices at the end of the furlough scheme this month, though.
The dealer group is in a strong cash position with £31.5m ib the bank at the end of September, despite paying a £10.9m VAT bill back early.
The group also enjoys a £120m armoury should it need to draw down on borrowings. It also boasts £200m of net assets.
Mike Jones, ASE Global chairman and Car Dealer Top 100 compiler, said the results were a testament to the Marshall team.
He said: ‘This is an exceptionally strong trading update from Marshall, outperforming the strong market we have seen across the industry to deliver double digit growth in every department in the key month of September.
‘The confidence to provide profit guidance shows the strength of trading. Given this excludes the normal peak-profit month of March and that underlying profit for 2019 was £32m, this represents a really strong performance and credit should go to Daksh and the Marshall team.’
Zeus Capital analyst Mike Allen added the update was a ‘great performance’ and comes from a much better August and September versus a flat period last year.
In an update, he wrote: ‘Marshall Motor Holdings has delivered a stunning trading update, particularly in September, which sees 2020E increase from a break even position to £15.0m at the underlying PBT level.
‘We believe this significant outperformance is testament to the quality platform it has developed over the years, and continue to see MMH as a sector winner.’