Vertu has released its half-year results, beating analysts’ expectations and all previous records.
The listed dealer group told the Stock Market today (Oct 13) it had finished the period ended August 31, 2021, with an adjusted profit before tax of £51.8m.
The 2021 figure was up considerably from the £4.7m it made in the same half-year period in 2020 (FY21), and the £16.9m it made the year before.
Revenues for the company were up to £1.9bn – up from £1.1bn in the same period last year. Meanwhile, gross margin was at 11.6 per cent.
Analysts Zeus Capital have now revised Vertu’s FY22 forecasts from £50m-£55m to ‘at least’ £65m.
The figures also showed the listed dealer group shifted a total of 44,281 new cars while used car sales stood at 49,697 giving a combined total of just shy of 94,000 units – up from 58,518 units sold in the same period last year.
Group gross profit from the sale of used vehicles totalled £82.4m (£41.2m previously), and when compared with the more stable period ended August 31, 2019, sales were up by 0.5 per cent, while the average selling price of £15,819 per unit was up by nine per cent.
Compared to the same period ended August 31, 2019, the gross profit for new cars was up by £700,000 despite a 15.2 per cent fall in the number of new cars sold. The average new car selling price was £21,319 per unit – a 16.6 per cent increase.
Vertu has also been on the acquisition trail which comprised 12 BMW and Mini dealerships (in York, Sunderland, Teesside, Durham and Malton), four VW showrooms from Sytner Group in West Yorkshire, two Honda showrooms in Bradford and Huddersfield, a Kia site in Bradford and a multi-franchise site in Edinburgh.
The acquisitions added £3.3m to Vertu’s overall profit before tax figure, while the closure of its Volkswagen operation in Whitchurch, Herefordshire (March 2021), the sale of Leicester Citroen (February 2021) and the disposal of its wheelchair accessible vehicle conversion business, resulted in a £0.2m decline in profit compared to the six month period ended August 31, 2019.
During the half-year, Vertu received £22.8m in furlough cash and a business rates relief of £4.3m.
Commenting on the results, Vertu Motors CEO Robert Forrester said: ‘The record profitability delivered in the period has undoubtedly been aided by very favourable used vehicle market conditions, however, this is a remarkable performance outperforming market trends.
‘I am proud of the entire Vertu team for their adaptability and effort.’
He added: ‘The group has continued to evolve during the period, with further enhancement of its strategy in achieving enhanced online sales capability via the group’s Click2Drive technology platform and the introduction of a ‘concierge’ service for sales customers under the Click2Drive banner.
‘The number of sales outlets has again grown as a result of the execution of the group’s multi-franchise strategy. Efficiency and productivity gains continue to be delivered through the enhanced use of technology.
‘We have again generated significant free cash flow and have a very strong balance sheet making the group very well placed to benefit from the changes and significant opportunities which are ahead of it.
‘The resumption of paying dividends to shareholders shows the board’s optimism in our strategy and its execution.’
Looking ahead, Zeus Capital said: ‘The group’s September performance was ahead of original budget and at record levels, despite the well documented supply constraints.
‘The key risk we see going into 2022 is the impact of cost inflation, particularly on labour a market which continues to tighten.’
Sanjay Vidyarthi, industry analyst at Liberum, said: ‘Vertu has delivered a record H1 performance, with adj. PBT of £51.8m more than in FY21 and FY20 combined. This is a function of the super-normal used car pricing environment, but we think that Vertu has materially outperformed the market.
‘September was a record profit month and we increase FY22E PBT by 19 per cent. We make no change to FY23E and our numbers look cautiously set. Omnichannel initiatives continue apace and the acquisition pipeline is strong.’