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Vertu Motors interim profit drops but FY expectations backed

By Michele Maatouk

Date: Wednesday 09 Oct 2019

(Sharecast News) - Vertu Motors posted a decline in interim profit on Wednesday but said it was on track to meet its overall expectations for the year.
In the six months to the end of August, pre-tax profit fell to £16.1m from £17.3m in the first half of last year, while revenue grew 5.6% to £1.6bn.

Total used retail vehicle volumes rose 2.8% during the period, but new vehicle volumes fell 7.9% on a total basis and 10.1% on a like-for-like basis. Vertu said a weaker pound discouraged manufacturer supply into the UK and led to price increases for consumers, denting retail vehicle sales.

"Continued sterling weakness driving price rises and declining used car residual values have led to an increase in the cost to change for consumers seeking a new car. This has reduced demand with change cycles lengthening," Vertu said.

As far as current trading is concerned, the company said September was ahead of prior-year levels, with LFL new retail volumes down 1.6% and UK private retail registrations stable. Used vehicle LFL volumes rose 3.5% and service revenues grew 11.4% on a LFL basis. Vertu said used vehicle residual values have remained stable in volume franchises, while oversupply in certain premium franchises continues to impact on vehicle values.

Chief executive Robert Forrester said the group performed "well" in the first half against "a more challenging backdrop".

"Our omni-channel retailing strategy and discipline around the allocation of capital, coupled with a net cash position, underpins the board's confidence in the future," he said.

At 1025 BST, the shares were up 2.5% at 33.37p.

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