Macklin Motors owner gets motoring
● Further pick-up in trading in July leads to pre-tax profit of £7.4m
Vertu Motors, the car dealership group with a dozen Macklin Motors showrooms in Scotland, said trading in July had been “significantly” stronger than envisaged, leading to a record month for used car profits.
The group reported an adjusted profit before tax of £7.4 million for the month, with the result absorbing restructuring costs totalling some £700,000 relating to recently announced headcount reductions, which have now been completed.
Last month, 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.
In its latest trading update, the group noted that the July profit was significantly ahead of the prior year and original business plan, reflecting bumper customer demand.
The result includes £1.3m in respect of monies received from the Chancellor’s job retention scheme. Vertu expects its remaining furloughed colleagues to be back at work by the end of this month.
The firm incurred an adjusted loss before tax of £5.2m in the March to June period and so has now made year to date an adjusted profit before tax of £2.2m. As previously advised, bosses are not providing profit guidance for the full year due to “continued uncertainty”.
Chief executive Robert Forrester told investors: “July trading continued the trends seen in June and was significantly stronger than both what we envisaged and the group’s original business plan for the month.
“A robust recovery in customer demand for our vehicles and servicing has continued, aided by our investments in omnichannel retailing.
“A very successful zero per cent finance used vehicle sale event was executed in a majority of the group’s English dealerships and this, together with strong used car margins, aided the delivery of a record month for used car profits.
“The group’s high margin aftersales operations also performed well, delivering year on year growth in revenue, gross profit and margin.”
The group, which already has a network of more than 130 sales outlets across the UK, pointed to several growth opportunities that are “currently being evaluated”. It also noted that national retail new car registrations had seen “the first meaningful year on year uplift for 17 months”.
Meanwhile, rival car dealership Lookers has warned over a “material” first-half loss after lockdown as it also revealed an accounting investigation is being extended further across the business.
The group, which suspended shares on 1 July after it discovered a potential fraud on its books, said it would have to put back its 2019 results further after already delaying in March and June.
Lookers said the widened scope of the investigation by Grant Thornton meant further work was needed on its corporate leasing division and vehicle financing arrangements, as well as the 2018 and earlier balance sheets.
It has already alerted over a possible £19m hit from the accounting issues and said it was assessing the impact of these matters on accounts, but still expects to remain profitable in 2019 on an underlying basis.
“A robust recovery in customer demand for our vehicles and servicing has continued, aided by our investments in omnichannel retailing”
ROBERT FORRESTER, CEO