Vertu hikes profit forecasts once again but warns new car supply issues could cause it to falter

  • Vertu Motors says it will now make up to £32m this year
  • Positive start has continued with ‘strong trading trends’ helping dealer group
  • Update ahead of today’s AGM given to Stock Market this morning
  • Analysts hike forecasts for group, but fear new car supply issues could impact sector

Time 3 months ago

Vertu has hiked its profit forecasts for the year again as it reveals ‘strong trading trends’ have continued.

In an update ahead of its AGM today, the listed motor group said adjusted before tax profit for the year will be ‘above current expectations’ and in the range of £28m-£32m.

However, the group has warned that there are ‘risks’ for the rest of this year around ‘potential Covid-19 disruption’ and ‘vehicle supply constraints’.

Vertu Motors – which has 149 dealerships across the UK – said it is already seeing delays to new car orders with some of its brands.

The update said: ‘A tightening of new vehicle supply, largely reflecting component shortages flagged in the year end announcement, is increasingly apparent.  

‘The expected time between order and delivery of new vehicles to customers for certain of the group’s franchises is now seeing elongation.  

‘The used car market remains very robust from a demand perspective. The reduction in new car supply is contributing to a reduced supply of used vehicles, with a resultant exceptional wholesale pricing environment.’

The upgrade to Vertu’s numbers – the sixth most profitable group in the UK according to the Car Dealer Top 100 – has impressed analysts. 

Zeus Capital increased its forecasts for the group by more than 15 per cent and said it expects the dealer to grow to a share price of 87.9p by 2024.

This morning, Vertu was trading at 45.9p.

The investment bank said: ‘In an AGM trading update, Vertu has confirmed that strong trading conditions witnessed in March and April have continued to date. 

‘This is likely to lead to a very strong H1 performance, albeit we exercise some caution that supply constraints and ongoing Covid-19 disruptions could impact the key trading period of September and therefore H2 performance.’

Fellow analysts Liberum made no change to its predictions for Vertu’s performance in 2023, but increased its guidance for the current year by 15 per cent too.

In a briefing, Liberum said: ‘Supply constraints and strong demand are pushing up used car prices and gross profit per unit. 

‘Tighter new car supply could impact trading in H2 and this keeps our forecasts cautiously set.’ 

However, Vertu remains positive about the future and believes it has the right plans in place to continue its growth.

The pre-AGM update from the group added: ‘The board remains confident in the prospects for the group.  

‘With its strong asset base, scale, manufacturer relationships, well invested systems including the Click2Drive sales technology platform and experienced leadership team, the board believes that the group is strategically very well placed to capitalise on the changes and opportunities in the UK motor retail sector.’

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Shareholders will vote at AGM on the director’s remuneration report and is expected to face backlash after handing boss Robert Forrester a £200,000 bonus for last year’s performance.

It’s believed Vertu’s top executives had originally declined to take a bonus.

But its remuneration committee, after ‘engaging directly with several of the largest shareholders’, decided to hand out reduced bonuses after ‘significant progress’ was made by the company, reported the Mail on Sunday.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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