Vertu on track despite blow to profits
● Resilient result for first half comes against challenging industry backdrop
Vertu Motors, the car dealership group that trades as Macklin Motors in Scotland, has seen its half-year profits dented as sales of new cars reversed by more than 10 per cent.
The group, which runs more than 120 showrooms and outlets across the UK, posted a 7 per cent fall in pre-tax profits to £16.1 million for the six months to 31 August.
It said like-for-like sales of new cars dropped 10.1 per cent as drivers held on to their existing motors for longer in the face of higher prices caused by the Brexit-hit pound, as well as falling used car values.
Used car sales nudged up 1.6 per cent on a like-for-like basis and the group said prices in the used market had now stabilised, although those at the premium end remain under pressure. It added that new car sales had continued to fall in September, down 1.6 per cent on a like-for-like basis.
The group booked an adjusted operating profit of £19.6m for the period, up from £19.4m a year earlier, while total revenues amounted to £1.6 billion, with like-for-like revenue growth of 2.3 per cent.
Vertu told investors: “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.”
The firm said it remained on track for the full year, though it added a note of caution amid Brexit uncertainty.
“Continuing political uncertainty has potential to undermine consumer demand notwithstanding continued UK economic growth and record employment levels,” the group noted.
An interim dividend of 0.6p per share was declared, up 9.1 per cent, year-on-year.
Chief executive Robert Forrester said: “The group performed well in the first half against a more challenging backdrop. We have an experienced leadership team, well invested systems and operationally we are keeping our discipline by doing all the basics very well.”
Last week, motor industry leaders expressed concern at a sharp fall in new car sales north of the Border, with Scotland firmly stuck in the slow lane.
New figures showed that registrations in Scotland reversed 4.7 per cent in the nine months to the end of September, compared with the same period last year. For the UK as a whole that year-on-year decline was just 2.5 per cent.
Only two regions of Scotland – Tayside and Central – managed to record growth in the year to date.
The figures for September alone were even more stark. There was an 11.3 per cent slide, year-on-year, in Scotland where the UK notched up a modest 1.3 per cent increase.