Vertu Motors upgrades trading performance following automotive tailwinds
UK automotive retailer Vertu Motors has upgraded its trading performance for the year ended 28 February, as it continues to benefit from used and new cars’ gross margins.
In a trading update published today, the group said it expected the adjusted profit before tax to be “not less than £75m,” after it delivered a significant growth in like-for-like vehicle sales margins compared with the previous two years.
“The trading results have been aided by sector tailwinds and limited vehicle supply leading to augmented margins,” said Vertu Motors’ chief executive Robert Forrester. “In addition, recent acquisitions have contributed at a higher level than initially envisaged due in part to a swift and successful integration process.”
Vertu’s used car business reported a 52.5 per cent gross profit per unit while margins rose to 9.4 per cent. As for new retail car, the company’s profits increased by 41.6 per cent.
According to Liberum analysts, supply constraints which have supported Vertu’s gross margins could normalise but demand, especially that of new cars, continues to remain exceptionally high.
“We increase our FY23E adj. PBT by 9 per cent to £35.4m which would be a record year of profitability for Vertu, excluding FY22E,” Liberum said in a note.
Vertu also announced the launch of a £3m share buyback programme, following the success of a similar one in November.
“The debt capacity of the company, current net cash position and positive cash flow is such that we will also continue to pay dividends and consider acquisition and investment opportunities as part of the pursuit of the ongoing growth of the business,” read the statement.