Vertu Motors H1 profits held back by soft new car market

2nd Sep 2024 07:41

(Sharecast News) - The share price of Vertu Motors was in reverse on Monday after the car dealer reported a weaker environment for new car sales, which it said was offset by resilient pricing in the used vehicle market.

In a trading update for the first five months of its fiscal year, the company said full-year adjusted profits should be in line with current market forecasts.

First-half profits are expected to be lower than last year, as anticipated, though the performance in the second half should improve due to a stronger used car market and "enhanced used vehicle trade values". Used vehicle volumes were up 5.0% on a like-for-like basis in the five months to 31 July.

Meanwhile, the company's aftersales operations - such as servicing, parts and MOTs - put in a "robust" performance, with revenues and profits ahead of last year.

However, new retail vehicle sales were 5.8% lower year-on-year in the five-month period, which chief executive Robert Forrester blamed on the "government's regulation to transition to battery electric vehicles [which] causes market volatility and negative impacts".

Nevertheless, Vertu's CEO said he was "pleased" with the group's performance. "Our high margin, resilient aftersales business continues to thrive aided by higher technician numbers and strong execution of the group's vehicle health check process.

He added: "The current dislocation in the market presents opportunities for Vertu Motors to capitalise on, assessed using strict investment return metrics, with our strong balance sheet providing financial flexibility, an excellent portfolio of strong brands, robust and scalable systems, and a strong and experienced leadership team with motivated colleagues."

Vertu shares were down 3.1% at 69.4p by 0837 BST.