Vertu remains cautious as revenues rise amid drop in new vehicle sales

Time 10:20 am, July 24, 2019

VERTU Motors says it is staying cautious for the short term as it prepares to report revenues rising amid a fall in new retail vehicle volumes.

Its chairman, Peter Jones, is due to make a statement at the dealership retail group’s annual meeting today about the company’s performance during the four months to June 30.

Vertu – whose subsidiaries include Bristol Street Motors, Macklin Motors, Jaguar Farnell, Land Rover Farnell and Gordon Lamb Group – made a pre-tax profit of of £25.3m for the year ended February 28, 2019, which was down 17 per cent on 2018’s £30.4m.

Among the highlights in the months since then, though, Vertu enjoyed a 14.7 per cent rise in service revenues – a like-for-like growth of 8.1 per cent – and a 5.9 per cent increase in used vehicle volumes (up 3.7 per cent like-for-like), as well as a 5.4 per cent rise in group revenues (up one per cent like-for-like).

However, new retail vehicle volumes fell by 10.3 per cent – a 13.2 per cent like-for-like drop – and new Motability vehiclae volumes dipped by 4.1 per cent, which translated to a 4.7 per cent like-for-like fall.

Vertu said total UK new car registrations fell by 4.7 per cent in the four months to June 30 and it was ‘likely that the underlying consumer market declined at a higher rate, with the registration statistics aided by increased pre-registration activity in the market, creating a disconnect between reported registrations and retail sales volumes.’

It added: ‘Consumers appear to be more cautious concerning car purchases in the light of increasing political and economic uncertainty caused by the extended Brexit process.’

Looking ahead, Vertu said in its statement: ‘The board remains cautious for the near term but is confident in the medium and long-term prospects for the group. With its strong balance sheet and stable, experienced management team, the board believe that the group is very well placed to capitalise on the challenges and consequent opportunities in the UK motor retail sector.’

It warned of a decline in dealerships, saying ‘there will be significant consolidation opportunities in the next two years whilst, at the same time, dealership numbers in the UK are likely to face much downward pressure, so improving the profit potential of those that remain.’

Vertu also said it was continuing to assess possible buyouts, but warned of possible restrictions on new vehicle supply because of new EU emissions regulations coming into force on September 1.

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