Cambria Automobiles has reported increased profitability in interim financial results revealing that the AM100 car retail group was performing 'ahead of expectations' prior to the COVID-19 lockdown.
However, chief executive Mark Lavery conceded that “the material impact of Coronavirus has overtaken the normal operation of our businesses” in the financial results for the six-month period to February 29, which were published this morning (May 6).
While Cambria’s revenues declined by 1.7% to £303.1 million (H1 2018: £308.3m) during the reported period, its results revealed underlying profit before tax up 14.5% at £6.3m (H1 2019: £5.5m), resulting in an improved underlying net profit margin of 2.07% (H1 2019: 1.79%).
Cambria’s shift into luxury vehicle sales with Aston Martin, Bentley, Lamborghini, McLaren Automobiles and Rolls Royce helped to mitigate the impact of a 10.1% decline in new vehicle sales with an 11.6% increase in average profit per unit.
Used vehicle sales rose 2.8%, meanwhile, with a 1.8% improvement in profit per unit.
Back in March, Lavery told AM that the group's shift towards luxury car retail had enabled it to maintain profits as manufacturers adjusted vehicle supplies to mitigate the impact of new EU CO2 emissions regulations.
But while the group said in its results statement today that it was pleased with H1 results which were “ahead of the prior year and marginally ahead of management’s expectations” it was clear that the impact of the new COVID-19 threat to the car retail sector could not be avoided.
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Voicing his concerns, Lavery said: “Currently do not have visibility on the exit strategy from lockdown nor on the actions that we will have to take in light of the economic outturn as society.”
Cambria said that some of its aftersales facilities had remained open on a limited basis to support keyworkers following the wider March 24 closure of its retail facilities.
In addition to other cost reduction measures taken by the group, Lavery has taken a 50% reduction in salary and the board voluntarily agreed a reduction in salary and fees of between a 20% to 50% while many employees were placed on furlough as part of the Government’s Coronavirus Job Retention Scheme (CJRS).
Cambria’s statement said that the Board was working through “a number of return to work scenarios” that can be initiated at the appropriate time, in-line with Government guidance on social distancing “with the health, safety and wellbeing of our associates and guests integral to this process”.
Lavery said: “The industry was already facing some significant headwinds in relation to changing technology to meet more stringent emissions targets, an increasing cost base and disruptive supply factors.
“The emergence from the COVID-19 lockdown will be another challenge that we will need to contend with, but we reiterate that the group is well placed to respond to these challenges.
“Along with our strong balance sheet, we are confident that we have sufficient liquidity to see through the challenges that the pandemic currently presents.”
Cambria’s H1 interim results statement revealed that it had maintained positive operational cash flows, with a cash position of £20.1m (H1 2019: £22.9m) and net debt of £6m (H1 2019 net debt: £3.2m).
Its balance sheet showed net assets of £68.5m (H1 2019: £60.6m).
Lavery added: “I am very proud of the response of all of our associates and thank them for all the support and flexibility that they have shown.
“Our resilient business model will help us navigate the current environment whilst our enhanced franchised portfolio stands us in good stead to benefit from the eventual upturn.”
During Cambria’s reported period it implemented continued development of its franchise portfolio, including its entry into the Scottish retail market with the acquisition of the Leven Car Company’s Aston Martin dealership – and associated freehold property – in Edinburgh, taking the group to four dealerships with the brand.
Following the reported period’s end the group also completed the purchase of land in Solihull which will allow the relocation of its current Aston Martin Birmingham business into a new, purpose-built showroom.
Cambria is also strengthening its presence in the high luxury sector with acquisition of Leven’s Rolls-Royce Motor Cars dealership, which operates from a leasehold premises in Edinburgh –its first Rolls Royce franchise.
Volvo Preston was also refranchised to create a new Alfa Romeo and Jeep brand centre in the Lancashire city.