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Vertu Motors delivers record £51.8m profit in H1 2021

Robert Forrester, Vertu Motors chief executive

Vertu Motors has highlighted further growth potential through an “increasingly visible acquisition pipeline” after delivering a record £51.8 million adjusted pre-tax profit in H1 2021.

The AM100 car retail PLC revealed the 10-fold rise in profits in a set of interim financial results for the period to August 31, which also showed a 71.9% rise in revenues, to £1.92bn, as its new car sales rose by 44.8% and used car sales by 67.3%.

The group increased its full-year profit forecast by 19% to at least £65m (previously £50m to £55m) in light of the performance.

Vertu chief executive, Robert Forrester, credited market forces for much of the uplift in performance, with vehicle supply shortages triggering an uplift in margins.

The result was a £22.3m increase in gross profit generated from used vehicle sales compared to the same period in 2019, as gross profit per unit grew 42.4% to £1,679.

New car sales delivered a £0.7m increase in gross profit as gross profit per unit rose 20.2% on 2019 to £1,694.

Commenting on the results as a whole, Forrester said: “The record profitability delivered in the period has undoubtedly been aided by very favourable used vehicle market conditions, however, this is a remarkable performance outperforming market trends. I am proud of the entire Vertu team for their adaptability and effort.

“The Group has continued to evolve during the period, with further enhancement of its strategy in achieving enhanced online sales capability via the group's Click2Drive technology platform and the introduction of a 'concierge' service for sales customers under the Click2Drive banner. 

“The number of sales outlets has again grown as a result of the execution of the group's multi-franchise strategy. Efficiency and productivity gains continue to be delivered through the enhanced use of technology.

“We have again generated significant free cash flow and have a very strong balance sheet making the group very well-placed to benefit from the changes and significant opportunities which are ahead of it. 

“The resumption of paying dividends to shareholders shows the Board's optimism in our strategy and its execution."

Vertu announced that a share buyback process started in August this year had now resulted in the repurchase of two million shares at a cost of £1.1m.

The group also revealed that it will recommence the payment of dividends in January.

Growing profile

Forrester and group chairman Andy Goss highlighted a focus on marketing for the group’s Bristol Street Motors, Macklin Motors and Vertu brands, during the reported period.

As well as a new BSM TV advertising campaign and sponsorship of Channel 4 F1 coverage this included the naming rights to Newcastle’s Eagles Community Stadium.

Following the end of the reported period, Forrester also appeared on ITV’s Undercover Big Boss, an exercise which he told AM had raised awareness of the BSM brand by 10%, something he valued at £10m.

A new BSM TV advertising campaign will commence this month, focussing on the group’s Click2Drive online car retail offering.

But commenting on Vertu's introduction of an online concierge service in a bid to further boost its non-physical sales, Forrester said: “Pure online conversion ratio is about 0.0 of 1%.

“In the reported period we sold 600 used cars online, but we sold 50,000 cars in total.

“We think customers will benefit, and we’ll raise our conversation ratio, with someone to talk you through the sale as you do it online. It’s something I’ve seen implemented very successfully in the US.”

Portfolio changes

Forrester told AM that Vertu would be looking to expand through acquisition – possibly before the end of the year.

Vertu now operates a network of 154 sales and aftersales outlets across the UK, having made a number of changes centred on a multi-franchising strategy.

It now has 28 (24%) locations representing more than one manufacturer brand.

Among the change were the addition of Citroen to the group's Vauxhall outlet in Northampton – the third Citroen outlet added in the last 12 months –  and of Vauxhall to Ford Dunfermline, where more franchises planned for the location where Ford sales ended on September 30.

The Honda Bikes franchise was added to the Group's existing Honda dealership in Stockton, meanwhile, bringing the total number of outlets in the Group's Vertu Motorcycles Division to four. 

Vertu has also opened new standalone Renault and Dacia franchise outlets in Leicester and York and has added its first two MG Motor UK franchises, in Carlisle and Beaconsfield.

The Hyundai franchise was added to the Group's existing Honda dealership in Sunderland.

During the reported period, Vertu’s only Mitsubishi sales outlet ceased operation and Leicester Citroen was disposed of, with the premises retained to allow refranchising to Renault and Dacia.

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