Owner of Scottish car chain Macklin Motors eyes possible takeover targets
Chief executive Robert Forrester said the group was emerging strongly from the initial period of hard lockdown.
First-half results revealed an adjusted profit before tax of £4.7 million with no exceptional items in the period, on sales of just over £1.1 billion, despite ten weeks of closed showrooms.
Quarter one saw a loss of £14.3m amid the lockdown, while the second quarter, in contrast, generated a profit of £19m.
The results cover the six months to the end of August, but Vertu also highlighted a record trading performance during the key month of September.
Earlier this week it emerged that demand for new cars across the UK fell to a 21-year low last month. Industry data revealed the weakest September performance since 1999 when new number plates began being issued twice per year, in March and September.
Forrester said: “Vertu made a profit in the first half, we have taken £10m of annualised costs out of the business and period end net cash was £36m. This is an exceptional performance in the circumstances.
“The board is actively considering several opportunities for the expansion of the group and expects such consolidation opportunities will be significant over the coming months and years.
“At the same time, dealership numbers in the UK are likely to face downward pressure. This should improve the profit potential of those that remain, with more scaled operations gaining from cost and marketing synergies.”
But he also cautioned: “While the essential tenor of this report about the future is optimistic, the prospects for the next six months remain uncertain and the impact on the business is unclear.
“In addition, there is uncertainty over the UK’s departure from the EU and rising unemployment due to the pandemic. The prospects for the remainder of the financial year remain as uncertain as the virus itself and therefore the outlook for [full-year] trading performance is subject to risks and should be viewed in this context.”
The group currently runs a network of 135 sales and aftersales outlets across the UK, making it one of the industry’s biggest operators.
Chairman Andy Goss told investors: “The lockdown afforded the time and motivation to further develop the business, in particular in the area of technology.
“Enhanced omni-channel retail capability allows customers to increasingly transact with the group as seamlessly from home as they can in person in a dealership.”
In July, Vertu said it would trim its headcount by about 6 per cent, equating to some 345 workers across the UK, as a result of efficiency improvements and other cost initiatives.
An August stock market update noted that trading in July had been “significantly” stronger than envisaged, leading to a record month for used car profits. It said the July profit was significantly ahead of the prior year and original business plan, reflecting bumper customer demand.