7:18 am, July 14, 2020
Vertu Motors will make six per cent of its workforce redundant as it announces it made £9m profit in June.
Reporting a stronger than expected month of sales, chief executive Robert Forrester reported to the Stock Market this morning that the group had bounced back from a loss in the previous three months.
During March to May the group lost £14.2m with new retail car sales up nearly one per cent.
Fleet sales were down by half, commercial vehicles down six per cent and used car sales down 5.9 per cent.
The group said: ‘Overall, retail sales demand appears to have positively rebounded due to a number of factors. Pent-up demand is evident with consumers having increased savings ratios during the lockdown.
‘Lack of plans to undertake foreign holidays and to stay in the UK may also be increasing demand as well as a potential aversion to the use of public transport.
‘These trends have continued into July.’
Vertu also revealed its investment in online sales software has improved efficiencies in car sales administration and will result in the job losses.
The group said: ‘As a consequence of these efficiency improvements and other cost initiatives, it is anticipated that the group will reduce headcount by approximately six per cent (345 colleagues).
‘This programme is expected to be concluded at the end of July and together with other identified cost savings, is expected to deliver on-going annualised cost savings of £10m.’
The group’s in house software team has improved the dealer’s buy online and reserve it now functions, and introduced paperless car sales processes that allows customers to sign via text message.
Vertu also reported that is has a strong cash position and has reduced its used vehicle stock to deliver £20.9m of cash back into the business.
Robert Forrester, CEO of Vertu Motors said: ‘June trading was stronger than we had expected.
‘The group’s cash position was much stronger than we could have hoped, despite the fact the board has made the decision to ensure all suppliers are paid in full, on time, illustrating the discipline within the business.
‘The Covid crisis has driven an acceleration of technology uptake and we are embracing this trend to futureproof the business.
‘As automation progresses, we have made the difficult decision to reduce group headcount by six per cent, which contributes to £10m of on-going annualised cost savings being identified.’
As of June 1, 37 per cent of the group’s team were at work, but this has risen to 75 per cent by the end of the month.
Vertu said it received £3.3m furlough cash and nearly £1m in rates relief, the latter of which it will benefit from until March next year.
And the dealer group reported that it was up to date with HMRC payments and rent.
However, it remains cautious as to the outlook for the rest of the year, adding: ‘Given the ongoing uncertainty around the pace and sustainability of economic recovery, full year guidance remains withdrawn.’
Vertu will hold its AGM on August 20.
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