Vertu Motors revenue rises, profit slips in first half

16th Oct 2024 11:35

(Sharecast News) - Vertu Motors reported a resilient first-half performance on Wednesday, with revenue increasing 2.9% to £2.49bn, compared to £2.42bn in the first six months of the 2024 financial year.

The AIM-traded firm said despite that growth, adjusted profit before tax fell to £23.5m for the six months ended 31 August, from £31.5m in the prior year, as expected due to rising costs from inflation and increased headcount.

Its aftersales operations delivered strong results, contributing an additional £7.1m in gross profit.

Used vehicle sales saw like-for-like volume growth of 3.9%, with an improved gross margin of 7.3%.

However, new retail vehicle sales volumes were down 5.9%, although the group outperformed the broader UK market, which experienced an 11.2% decline.

Battery electric vehicle (BEV) sales volumes also saw a 10.9% increase, bucking the wider market trend of a 7% decline.

Vertu said it took significant steps in expanding partnerships with Chinese manufacturers during the period.

The group's balance sheet remained robust, with net debt reduced to £83.9m from £90.7m year-on-year, and gearing levels below target.

Its tangible net asset value per share increased to 73.7p, up from 70.9p in the first half of 2024.

The group declared an increased interim dividend of 0.9p per share, payable in January, and had repurchased 3.3 million shares since March as part of its ongoing buyback programme.

Looking ahead, Vertu said its trading in September was in line with prior year levels, with new retail sales volumes up 5.2%, outperforming a market that declined by 1.8%.

BEV sales volumes more than doubled in September, against a broadly static UK market.

Profitability in the second half was expected to improve, driven by a stronger used car market and better trade values.

The group said it was also focusing on cost management amidst inflationary pressures.

By April, all UK retail outlets would trade under the Vertu brand, which the board expected to enhance marketing efficiency and deliver cost savings.

Additionally, the group said it was making progress in disposing of surplus properties, generating cash and profits.

The board said it remained confident in achieving full-year profit expectations.

"I am pleased with the group's first half performance against a fast-shifting market backdrop," said chief executive officer Robert Forrester.

"Our high margin aftersales business delivered an excellent first-half performance, aided by higher technician numbers and execution of the group's vehicle health check process.

"The retail new car market declined as the government's regulation to transition to battery electric vehicles introduced market volatility and negative effects in terms of affordability."

Forrester said the company took "considerable" market share in the new retail market, and in the BEV market in particular, which he put down to the group's adaptability and operational execution.

"The group's strong balance sheet, excellent portfolio of brands, robust and scalable systems, and a strong and experienced leadership team with motivated colleagues puts us in a great position from which to deliver on our strategic goals.

"We are actively pursuing value accretive growth opportunities to enhance our portfolio, applying strict investment return metrics as well as returning cash to shareholders."

At 1116 BST, shares in Vertu Motors were up 4.17% at 60p.

Reporting by Josh White for Sharecast.com.