19 October 2011

Vertu Motors has warned investors that profits for the year will be “at the lower end of market expectations” after disappointing sales in September and a fall in half-year results.

The group said that economic and industry trends have resulted in “September profitability being behind the board’s expectations for the month”. However, it noted that overall group profits were up year on year.

The statement came as Vertu announced half-year financial results to August 31 with pre-tax profits down by 16% to £4.1m and like-for-like revenue down by 4.5%, reflecting lower new vehicle sales. However, the company is continuing to pursue its growth strategy and revenue in the period, driven by acquisitions, rose by 7.0% to £547.0m.

Chief executive, Robert Forrester, said: “With our strong, ungeared balance sheet and the on-going significant operational cash generation, Vertu Motors is clearly in a position where current market weakness will create further acquisition opportunities in line with our growth strategy.”

Vertu continued to expand during the period, adding seven sales outlets in six new locations in the six months to end of August. As a result, it trades from 82 sales outlets. But Mr Forrester was forced to admit that the group has suffered in the difficult trading environment.

“It has become increasingly clear that economic growth and consumer confidence were under pressure and new vehicle sales to private customers declined in the UK at a greater rate than anticipated,” he said.

“Used car demand also appears to have been impacted as disposable incomes were squeezed. In contrast, aftersales revenues were stable and followed a more robust path as exhibited in previous downturns. Aftersales represents 44.1% of the group’s gross profit.”

In a management statement issued at the same time, Pendragon said that, despite the continued economic uncertainty, underlying trading performance remains in line with expectations for the full year.

Chief executive, Trevor Finn, said: “Used performance continues to be a differentiator for the group and we believe this will continue in the final quarter with further recovery in used margin. However the new retail car market is challenging, particularly for some of our franchises in the volume sector.”

Tags: Auto Retail Network, Pendragon, Robert Forrester, Trevor Finn, Vertu