8:07 am, May 15, 2024
Vertu Motors saw its pre-tax profit rise last year on record revenue although its adjusted profit before tax was down.
Announcing its results this morning for the year ended February 29, 2024, the Gateshead-headquartered dealer group – which also trades as Bristol Street Motors and Macklin Motors – said pre-tax profit went up by 6.5% to £34.6m on revenue that rose by 17.6% to £4.72bn.
However, the listed dealer group’s adjusted profit before tax fell by 3.8% to £37.8m, with the group blaming the effect of declining used car vehicle values during 2023’s last quarter and the resulting impact on used car margins as well as gross profit generation.
It said the increase in pre-tax profit was thanks to lower non-underlying costs incurred during the year, while its revenue rise was helped by acquisitions completed after March 1, 2022 – dominated by its Helston acquisition which it said cost £115m – that contributed an extra £450.1m.
Meanwhile, dealerships that were disposed of or closed generated a £46.5m fall in revenue.
Vertu shifted 86,437 used cars – up 4.7% – and 101,332 new, which was a 17.8% rise. Agency new retail cars totalled 1,585 versus 80 the previous year.
Aftersales revenue was up 8.6% at £418.7m with gross profit rising by 7.7% to £185.4m, which the group said it was ‘delighted’ about.
Vertu also said that a final dividend of 1.50p per share would be recommended at its annual meeting on June 25, taking the full-year dividend to 2.35p per share – a 9.3% increase on last year.
Subject to shareholder approval, the dividend will be paid on July 26.
It said its profit figures were in line with current market expectations, with CEO Robert Forrester, pictured, commenting: ‘It was pleasing to see the group successfully navigating a difficult period of trading with declining used car values in the last few months of 2023.
‘Used vehicle prices and margins have now stabilised and there has been strong cash generation from lower working capital reducing net debt below market expectations.
‘During the year, record revenues of £4.72bn were achieved.’
He added: ‘Moving to the new financial year, March and April 2024 were successful months.
‘The group delivered new retail like-for-like sales volumes ahead of the market decline in March and April. This demonstrates the robustness and strength of the group’s operations.
‘The group remains focused and thoughtful around capital allocation.’
Chairman Andy Goss said the adjusted pre-tax profit was ‘broadly in line with analysts’ expectations’. Among the highlights, he said the bolt-on acquisition of Rowes last October had augmented Vertu’s growing presence in the south-west of England.
But he warned of ‘possible challenges in the year ahead’, including the effects of a general election plus high interest rates as well as a cost-of-living squeeze on consumer confidence.
Goss added: ‘There is, additionally, potential for disruption in new vehicle supply as the UK government seeks to transition to battery electric vehicles and manufacturers attempt to navigate new emission legislation and potential significant fines.
‘These impacts have the potential to affect revenues and profitability in the short term. We remain, however, focused on the delivery of the group’s long-term strategic goals, appropriate capital allocation and free cash flow generation.
‘The group’s performance is, as always, the result of the commitment and hard work of all colleagues. I would like to thank all the team for their continued effort and dedication.’
A share buyback approval for the potential purchase of shares for up to £3m has been put in place for the new financial year.
