17 October 2012

Vertu Motors, owners of the Bristol Street and Macklin Motors brands, has told shareholders it expects year-end profits to be “ahead of expectations”.

The group has announced a half-year pre-tax profit of £5.2m, which is up by 26.8% on the same period last year and well ahead of analysts’ forecasts. The results contrast markedly with the rather gloomy half-year statement of a year ago.

Chief executive, Robert Forrester, told shareholders: “The group has delivered an excellent profit performance for the first half of the financial year with strong growth compared to the prior year.

“Market conditions have improved and this is reflected in higher sales volumes in both new and used cars. The group’s aftersales strategies are now consistently delivering growth of revenues and profits in the service area.”

He added that businesses acquired in recent years are delivering on their growth potential and producing improving returns. Vertu has acquired a further 10 outlets since it last reported and now operates 86 sales outlets from 70 dealership locations.

Revenue in the period (which does not include September) rose by 14.8% to £628.1m (2011: £547.0m) and acquisitions undertaken in the period contributed £3.8m of revenue. Underlying revenues rose 7.6%, reflecting higher vehicle sales levels in the period.

Overall gross margins declined from 11.6% to 11.4% with consistent vehicle margins at 7.2% and a decline in aftersales margins. Mr Forrester said this fall was driven mainly by margin mix due to a petrol forecourt business acquired last year and pricing initiatives in vehicle servicing.

Vertu’s new car retail sales volumes (excluding Motability) rose 7.9% on a like-for-like basis in the six months and Mr Forrester repeated his view that private new car registration data has been impacted by increased dealer pre-registrations year on year.

Fleet and commercial new vehicle like-for-like sales volumes increased by 14.2% in the period and the group’s used car volumes rose 7.5% on a like-for-like basis.

Like-for-like service revenues rose 4.1% despite a continuing fall in the number of one to three year old cars in the UK vehicle parc.

Mr Forrester said success in increasing customer retention on older cars has reduced service margins in the period from 74.6% to 74.4%. However the increased volumes have resulted in a rise in overall gross profit in service of 3.7% on a like-for-like basis.

Tags: 2012, Financial results, Half year, Robert Forrester, Vertu Motors