15 May 2024

Vertu has given a positive outlook for the year ahead despite “stalled” EV demand in its latest full-year results. In line with market expectations, the group revealed an adjusted profit before tax of £37.8 million, down on last year’s £39.3m for the year ended 29 February 2024. Turnover for the group hit a record £4.7 billion, up from £4.0bn last year.

Commenting on the results, Robert Forrester, Vertu chief executive officer, said: “’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 £4.72 billion were achieved.

“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.”

However, Forrester used the results to warn that the industry is likely to miss the ZEV Mandate target set this year at 22% BEV for cars and 10% for vans.

“Battery electric vehicle sales growth in the UK has stalled. Government mandated targets increase over the coming years and there is a risk the industry falls short of these targets. With the threat of significant fines on manufacturers on missing targets, the risk of potential market volatility later in the year and medium-term is elevated,” he said.

Vertu has reduced net debt to £54.0m from £75.3m last year.

HIGHLIGHTS

• Profit before tax rose 6.5% to £34.6m from £32.5m.
• Adjusted profit before tax of £37.8m (FY23: £39.3m), on record revenues of £4.7 billion.  Profit in line with current market expectations.
• Operating expenses as a percentage of revenues fell to 9.7% (FY23: 9.9%) reflecting application of strong cost disciplines despite inflationary pressures.
• Used car margins weakened in H2 due to price corrections in the market: values and margins stabilised by the end of the Year.
• Aftersales delivered a strong performance, with like-for-like revenue up 8.6% and Core Group gross profit up £13.2m compared to FY23.
• Free Cash Flow of £57.0m in the Year (FY23: £54.3m) reflecting excellent working capital management and the underlying cash generative nature of the business.
• Net debt of £54.0m as at 29 February 2024, lower than market expectations (FY23: Net debt: £75.3m).
• Final Dividend of 1.50p per share recommended, bringing full year dividend to 2.35p per share (FY23: 2.15p), an increase of 9.3%.
• Net tangible assets per share of 70.5p.
• £7.5m returned to shareholders via repurchase of 11.3m shares during the Year.

Tags: Robert Forrester, Vertu