Motorpoint swings back to profit in first half

8th Oct 2024 08:30

(Sharecast News) - Motorpoint Group reported a strong first half in an update on Tuesday, returning to profitability after posting a loss in the same period last year.

The London-listed vehicle retailer said that for the six months ended 30 September, it achieved a profit before tax of about £2m, swinging from a £3.7m loss in the first half of the 2024 financial year.

No exceptional items were recorded during the current period.

Retail volumes increased 17% year-on-year, reflecting improved customer demand.

The group also reduced its average stock holding to 41 days, down from 47 days a year earlier, demonstrating efficient stock management.

Despite completing a share buyback programme, repurchasing 3.6 million shares at a cost of £5m, the company said it ended the period with net cash of £11.2m, in line with expectations.

Macroeconomic conditions showed signs of improvement in the half-year, with stabilised used car prices and margins, alongside improved consumer sentiment.

The reduction of interest rates in August further supported the company's performance, and additional rate cuts were expected to aid profitability.

While the supply of used vehicles remained limited, particularly in the newer market segment, Motorpoint said its operational focus under its 'Brilliant Basics' programme helped to drive the turnaround.

Looking ahead, the company said it was set to open its 21st store in Norwich in the second half, adding that it remained confident about its growth prospects as momentum continued.

The completion of the share buyback programme had meanwhile positioned Motorpoint for further investment to support organic, profitable growth, the board said.

"The resilience of the Motorpoint business model has been proven once again and I am delighted to confirm that the successful execution of our Brilliant Basics programme during 2024, alongside the easing of macroeconomic pressures, has resulted in a return to profitability," said chief executive officer Mark Carpenter.

"We also welcomed the first interest rate cut in August, the same month that we achieved our highest performing retail volume since March 2022."

Carpenter said the solid first-half performance stood the company "in good stead" as it looked to progress its strategy to accelerate growth.

"I am confident that we are entering the second half with strong momentum."

Motorpoint said it expected to announce its interim results on 27 November.

At 0843 BST, shares in Motorpoint Group were up 0.72% at 154.1p.

Reporting by Josh White for Sharecast.com.