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Cambria's 'data driven' approach to used cars reaps profit rewards

Mark Lavery, Cambria Automobiles chief executive

Cambria Automobiles chief executive Mark Lavery has told AM that a data-driven approach to used car retailing which delivered 148% return on investment has underpinned his business’ success.

In unaudited interim financial results published this morning Cambria revealed that its revenue had increased by 14.7% to £278.4m (H1 2015: £242.8m), underlying profit before tax was up 40.1% at £4.6m (H1 2015: £3.3m) and underlying net profit margin up 22.8% to 1.67% (H1 2015: 1.36%)  in the six months to February 29.

Overall, turnover for the six-month period totalled £278.4m, Cambria revealed.

Lavery was quick to recognise the role of streamlining of the group’s used car operation – which saw a 4.4% rise in used vehicle sales (to 7,417) with a 9.7% improvement in profit per unit – in the success of the wider business.

He said: “Of course we are very pleased with the position we are currently in. There is room for improvement in all areas, we are still making mistakes, but in terms of return on investment there are few business’ out there that are achieving what we are at the moment.

“Really, a lot of credit has to go to to the digitisation of our used car operations. We use data from Auto Trader and BCA to ensure that we are buying the right stock. We appraise out cars accurately and make sure they are prepared within 24 hours.

“ASE say that the industry benchmark for a used car turnaround should be 45 days and we are averaging 24. Similarly, return on investment is expected to be 78% and we are achieving almost double that at 148%.

“The success of used car sales has helped us trade very aggressively with our new cars and we have reaped rewards there too, as a result.”

Cambria’s new vehicle sales up 5.1% (to 5,637 units) with a 15.4% increase in profit per unit with revenues from aftersales increasing by 8.6% with gross profit improvement of 5.8% (to £13.1m).

Lavery said that Cambria aims to become a £1b turnover operation and is still on the hunt for “viable acquisitions”, with talks ongoing with a number of businesses.

The board considered the expenses incurred in the January 11th acquisition of Welwyn Garden City Land Rover and profit on the sale of its Exeter Jaguar branch in the same month – generating a net income of £1.098m – to be non-recurring in the period.

Cambria also disposed of its Croydon Jaguar operation after the February 29 results period.

But while integration of the Welwyn Garden City business is ongoing, Cambria currently has two franchised sites in the process of construction.

Work is yet to get underway at an all-new Solihull Aston Martin showroom which Lavery described as “a fantastic opportunity” and a ground-up rebuild of its JLR Barnet operation.

Lavery said: “Our two current Aston Martin sites are ranked one and two for customer satisfaction and, coming into a really exciting time for the brand, we’re really excited at the prospect of opening up in Solihull. It’s a fantastic opportunity in a great catchment for the brand.

“The new DB11 was unveiled at our Welwyn Garden City Aston Martin showroom recently and, as we’re already sold out of them across both our businesses, we sold three Vanquish models in days to people who couldn’t wait to invest in the brand.

“With that and the new F-Pace sold out until January of next year, we’re very pleased with demand for product from two of our key partners.”

Cambria recorded net assets of £37.6m (H1 2015: £30.4m) in today’s results alongside positive operational cash flows, with a cash position of £25.3m (H1 2015: £13.0m) and net cash of £0.3m (H1 2015 net debt: £0.9m).

Cambria’s shareholders saw underlying earnings per share increase 42.5% to 3.69p (H1 2015: 2.59p) with an interim dividend increased by 33.3% to 0.2p (H1 2015: 0.15p)

The business also secured a new £37m, five-year banking facility, providing additional funding capacity for growth.

Lavery said: “March has been a very strong trading month for us and these results reflect none of that period. I think we are happy where we are. We’re not the finished article and I think there is room for improvement, but I hope that our shareholders are happy with what we have achieved so far.”

> Cambria is currently number 21 in the AM100. The new AM100 will be revealed in June at a dinner in London on June 16. The countdown will also be published in the June issue of AM.

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