Vertu Motors has revealed that its 2021/22 pre-tax profits will have risen by more than 200% in 2022 as it forecast a year-end total of “not less than £75 million” in a trading update issued this morning.
The AM100 PLC’s chief executive, Robert Forrester, said that sector tailwinds had helped to ensure that it delivered significant growth in like-for-like vehicle sales margins and gross profit generation in all channels during the period to January 31.
Vertu announced the start of a further £3m share buyback programme in the wake of a £6m investment to acquire 9,751,009 shares, representing 2.5% of shares in issue, since August 26 last year.
Forrester said: “I am pleased to report that the Board now expects the trading result for the year ended 28 February 2022, at an adjusted profit before tax level, to be not less than £75m. This further upgrade would not have been delivered without a significant team effort and I would like to thank every single one of my colleagues for their hard work and dedication.
“The trading results have been aided by sector tailwinds and limited vehicle supply leading to augmented margins. In addition, recent acquisitions have contributed at a higher level than initially envisaged due in part to a swift and successful integration process."
Year of growth
Vertu will announce its preliminary results for the year ended February 28, 2022, on May 2011.
During the 2022 reporting period covered by today’s trading update, the group has added a total of 29 retail locations to a network now comprised of 159 Vertu Motors, Bristol Street Motors and Macklin Motors sales and aftersales outlets.
Most recently it added to its Toyota representation through the appointment to Arnold Clark’s former West of Scotland market area.
The “sector tailwinds” and increased scale drove it to an 18% year-on-year increase in revenues, an 8.9% increase in used car sales volumes, with 32,658 retail used vehicles, and 17.8% increase in new car sales in the five-month period to January 31, its trading update revealed.
Gross profit per unit on used car sales grew 52.5% to a record £1,846 (2021: £1,210) as gross margin percentages rose from 8.4% to 9.4% despite significantly increased sales prices.
Group expenses increased by £26.3m in the five-month period.
A groupwide review of colleague rewards and relevant actions, taken between October and December 2021, increased operating expenses by £1.6m, with its impressive trading performance also resulting in higher amounts of commission and bonus earnings for employees, increasing operating expenses by £1.9m.
The group said it had added an additional £1.1m in marketing spend in the period and also invested an additional £1.3m in its IT platforms including telephony, to enhance its delivery of omnichannel retailing through its new Click2Drive platform.
Despite the investment, Vertu’s trading update said that it retained a “strong balance sheet, experienced leadership team and strong systems capability” to ensures it is well placed to capitalise on the significant opportunities for growth that exist within the UK automotive retail sector.
It said: “The board considers that scale is a vital success factor in the sector given the need for strong brands and investment in digital developments and continues to have ambitious growth aspirations for the Group in the next few years.”
Adding a word of caution, however, the group’s statement added: “Considerable uncertainties remain over new vehicle supply and the timing of market normalisation.
“In addition, consumer confidence will be critical in the months ahead as cost-of-living inflationary rises become apparent and geopolitical uncertainty arises. These matters could impact vehicle sales.”