Marshall Motor Holdings' chief executive Daksh Gupta said that the group was in a “great position to continue outperforming the market” after profit before tax rose 32.9% in a record set of interim results.
Underlying profit before tax rose to £18.6m (H1 2016: £14m) as the group grew its revenues 43.7% from£826.4m to £1.19bn for the period ended on June 30.
Against the backdrop of a market which was down 1.3%, Marshalls saw its new car sales volumes rise by 32.7% to 16,902 and used car sales rise 5.8% to 23,716, although the results confirmed that the business had experienced ongoing pressure on margins.
During the Period, 83% of the Group's financed vehicle purchases were made using PCP products as total new car gross profit of £45.1m represented a 46.3% rise on H1 2016. Total used car gross profit of £31.2m was up by 36.9%.
Speaking to AM this morning Gupta (pictured) said that the growth leading to the set of record H1 results had clearly been bolstered by the acquisition of the Ridgeway Group in May 2016, but added: “These are a cracking set of numbers.
"Clearly the Ridgeway deal has benefitted out top line numbers, but like-for-like revenue growth (6.7%) was very strong too, which is a huge positive.”
Marshalls’ Ridgeway acquisition is delivering to plan, according to the group’s H1 financial statement, making a material profit before tax contribution of £5.4m (H1 2016: £1m).
The group's businesses now total 104 franchises covering 24 brands, operating from 90 locations across 26 counties.
And while Gupta acknowledged the pressure that the industry has been under during 2017, he credited a good spread of franchised partners – and a prevalence of premium brands, in particular – for Marshalls continued growth.
He said: “The premium brands have seen impressive growth this year and there is where the bulk of our volume is.
“Look at the German brands and JLR. They are now 40% of the market and 60% of our representation is now German or JLR. Add on to that the growth in Volvo, with the new XC60 arriving this year and an XC40 looking highly promising in 2018 and with Volvo added in that accounts for 70% of our volume."
In June Marshalls completed the acquisition of Leeds Volvo from Harratts Group for £77,000 with the support of Volvo Car UK.
The acquisition cemented the group's position as Volvo Car UK’s largest franchised partner, with nine locations in: Bishop's Stortford; Cambridge; Grantham; Leeds; Melton Mowbray; Milton Keynes; Nottingham; Peterborough and Welwyn Garden City.
Gupta said: “That puts us in a great position to continue outperforming the market in H2”.
Gupta did not comment on further expansion of the group in 2017 but it is making investments in new showrooms.
Construction of a new Audi dealership at a freehold site in Exeter is nearing completion and is scheduled to open in Q3 2017 while construction of a new JLR Arch Concept dealership at a new franchise point in Newbury commenced during H2 2016 and as expected to open in Q4.
The group’s financial statement revealed that it remains “well positioned to continue to execute its growth strategy moving forward”.
Adjusted net debt (excluding asset backed leasing loans of £65.9m) was £35.1m as of June 30 (2016: £32.4m) representing an adjusted net debt to EBITDA ratio of 0.7x.
The group stated that is has “significant balance sheet capacity” including £112.5m of freehold/long leasehold property.
The statement added: “Over the longer term, the board continues to believe it is in the best interests of all stakeholders that the group maintains a sound financial position.
“In this respect, the Board targets net bank indebtedness (excluding leasing segment loans) of not more than 1.25x net debt/EBITDA within its future results.
“This leverage may rise for a period of time towards the group's banking facility limit of not more than 3.0x should an exceptional investment opportunity arise.”