11 May 2022

Vertu Motors has revealed record results for the year ended 28 February 2022 with a profit before tax figure of £80.7 million.

The profit figure was up on market expectations and is up from a Covid-impacted previous two years profit of £24.6m in 2021 and £23.9m in 2020. Revenue for the full year 2022 was £3.6bn and the group has reported “vehicle sales volumes ahead of market trends in all areas on a like-for-like basis”.

Gross profit margin was up again in the latest results to 12.0% against 11.8% in the previous results.

Chief executive Robert Forrester said the figures were “undoubtedly aided by sector tailwinds” but added Vertu had also performed ahead of the market thanks in part to investment in IT. However, he sounded a note of caution over future growth: “The outlook will depend on the available supply of new vehicles and continuing consumer confidence. The group’s excellent financial position provides the resilience to overcome any economic slowdown and resources to continue to grow.”

Vertu, which operates 160 sales and aftersales outlets, also revealed trading during March and April of 2022 had been in line with 2021, delivering a trading profit of £19.1m.

Mr Forrester added: “Shortfalls in the supply of both new and used vehicles in the UK are likely to continue for some time because of the dislocation in global supply chains impacting on vehicle production. Such supply constraints helped to underpin vehicle values and margins throughout March and April. Consumer confidence in the face of rising domestic costs is a critical determinant to continuing success, both in terms of demand and used vehicle pricing trends. Management is focused on operational excellence around cost, conversion and customer experience and the delivery of the group’s strategic objectives.”

Vertu not only revealed record profits but also revealed it sold more than twice the number of used cars than online-only used car disruptor Cazoo. Vertu sold 88,772 used cars in the previous 12 months, up 28.6% on the previous figure. Cazoo sold less than 35,000 used cars last year at a profit per unit of £124. Vertu’s gross profit per unit stood at £1,763, up 45.6% on previous results.

Vertu’s new car sales were up 16.1% at 78,051 units.

However, the group also reported a like-for-like drop of 4.9% in the number of servicing hours. Mr Forrester said: “Most of this shortfall in hours arose from a reduction in warranty work undertaken by the group on behalf of its Manufacturer partners. A decline in the 0-3 year parc in the UK, due to reduced new vehicle registrations in the last two years, along with fewer journeys being undertaken in the early part of FY22 due to lockdowns, contributed to this decline in warranty work. Some weakness in internal hours sold was also apparent, driven by reduced volumes of vehicles sold in the core group. The group was successful in maintaining core retail service hours sold at FY20 levels, through strong execution of retention and aftersales processes and the active targeting of conquest business particularly of older vehicles.”

HIGHLIGHTS

• Record trading results delivered with Adjusted¹ profit before tax of £80.7m (FY21: £24.6m, FY20: £23.0m), on revenues of £3.6bn
• Vehicle sales volumes ahead of market trends in all areas on a like-for-like basis compared to FY20 (year ended 29 February 2020)
• Increased gross margin of 12.0% (FY21: 11.8%, FY20: 10.9%) reflects supply constraints and strong pricing disciplines
• Acquisitions successfully integrated and performing well
• Free Cash Flow of £44.2m in the Year and Net cash² of £16.2m as at 28 February 2022 (FY21 Net debt: £4.5m)
• Underlying corporation Tax charge of £16.1m (FY21: £5.2m)
• Net tangible assets per share of 66.8p (FY21: 50.2p) reflecting strong asset base, net cash position and cashflow generation
• 11.6m shares repurchased at a value of £7.1m since 20 August 2021, buyback programme continues
• Final Dividend of 1.05p per share recommended, payable in July

Tags: Robert Forrester, Vertu