Marshall Motor Group chief executive Daksh Gupta has insisted that the AM100 PLC will not be “splashing the cash like Manchester City” after record H1 financial results left it with a strong balance sheet.
Despite repaying £4m in Government COVID-19 support and handing staff a one-off 'loyalty bonus' and backdated pay review, Marshall’s balance sheet strengthened in the period to June 30, with net assets of £239.3m (June 30, 2020: £190.5m) underpinned by freehold/long leasehold property of £139.6m.
The group has made two acquisitions so far in 2021, but Gupta said that Marshall’s strong financial position would not spark a spending spree.
“Over the past 14 years we have done nothing stupid and we will continue to be very selective about what we buy,” he said.
Knowing Gupta to be a keen Manchester United fan, AM jokingly asked whether some of Marshall's cash would be spent "like Manchester City" on landmark new signings in the form of additonal car dealerships.
In a tongue-in-cheek response, Red Devils fan Gupta quipped: “We’re definitely not in a Manchester City position, and nor would we want to be. We’re like Manchester United, making targeted acquisitions that will add value.”
Gupta once again paid tribute to the Marshall workforce that had driven the business’s success, with the help of market tailwinds, to outperform the market in H1.
New vehicle volumes were up 46.1% to 15,566 as used volumes rose by 51.7% to 28,094 as gross profit per unit rose 2.5ppts to 8.6%.
And as revenues rose 49% year-on-year to £1.33 billion for the period alongside an underlying pre-tax profits rose 426.6% to £38.4m from a restated loss of £11.4m a year ago, he added: “If you look at our previous record profit before tax it was £16.3m. These are dream numbers.
“Obviously as a group we’ve ridden the sector tailwinds. We’ve done well in a period where used car prices were appreciating, which is an unprecedented set of circumstances.
“But we want to continue to look after our people as we have done in the COVID crisis and delivering strong results like this makes it easier to go to the board and suggest initiatives like a seven-figure bonus package for our workforce.”
Gupta said that he has paid more attention to car manufacturer’s half-year trading results than ever before in a bid to find clues to when each OEM expects the impact of global semiconductor shortages to ease.
A resurgence in supplies is likely to soften demand and values in the used car sector.
He said: “It’s been very hard to get a handle on things. Different manufacturers have different views and, of course, different suppliers themselves.
“Some have said there’s a possibility that it could go on until 2024.”
Right now, Marshall finds itself in a strong position, though.
Share prices in the business rose to 253p this morning, up 194.2% on the 86p low seen in April 2020.
As the group resumed its payment of dividends to shareholders, market anaylsts at Zeus Capital said: “We re-iterate our view that MMH has a creditable and reliable platform, which we consider will emerge as a sector winner. A 2021 P/E of 5.9x and a yield of 5.4% looks at odds with the progress delivered to date.”