7:36 am, December 9, 2021
Vertu Motors has released a trading update, revising its full-year profit expectation upwards to ‘no less than £70m’.
In an announcement to the London Stock Exchange this morning (Dec 9), the listed dealer group said the revision comes off the back of strong profitability in October and November which was ‘in excess of the business plan’.
The announcement interestingly added despite ‘ongoing dislocation in supply chains’, new and used vehicles supply in October and November ‘was better than envisaged and sold at enhanced margins’.
Vertu said customer demand remained ‘positive’ at its dealerships – 154 outlets across the UK under the Bristol Street Motors, Vertu and Macklin Motors names – and its showrooms were collecting ‘strong future order banks’.
The company did note that it’s seeing used car values starting to ‘plateau’ and to follow ‘more normalised seasonal trends’. This, along with more ‘robust pricing’, has led Vertu to pocket ‘above normal margins’.
In October, Car Dealer reported Vertu Motors has been running with around 500 – or 10 per cent – vacancies since March.
In this morning’s announcement, Vertu said it was experiencing a reduction in the number of vacancies, but didn’t reveal by how much. However, the firm did say the number of vacancies was still ‘above historic levels’, and reward packages have been rolled out across its group.
Referencing the profit revision, Vertu said: ‘The board remains cautious on the future outlook with the potential of further disruption from Covid-19 to our resource levels, consumer confidence and global supply chains.
‘Considering the robust trading performance delivered for the year to date, the board now anticipates that the group’s adjusted profit before tax for the year ending February 28, 2022 will be no less than £70m (previously not less than £65m).’
In a separate announcement, Zeus Capital said: ‘We increase our FY22 forecasts by 7.7 per cent to £70.2m to reflect this.
‘Our profit forecasts for FY23 and FY24 are unchanged, but even at the more normal levels of forecast FY23 profit, we see ratings upside for Vertu.
‘Recent bid activity in the sector highlights the current industry undervaluation and supports our intrinsic value estimate of 85.9p per share, a 25 per cent upside to current levels.’
Liberum said: ‘Management is now guiding to FY22E PBT of no less than £70m (previously £65m). We increase our forecast to reflect this, but make no change to FY23E. A CY23E PE of 8.8x remains cheap. Maintain 90p TP and Buy.’
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