4th Apr 2024 15:00
(Alliance News) - Things are looking up for the used car sector after Motorpoint Group PLC reported an improvement in trading in recent months, commented AJ Bell investment director Russ Mould.
On Thursday, Motorpoint said trading picked up towards the end of its financial year as tough conditions witnessed at the end of 2023 eased.
Shares in Motorpoint rose 2.1% to 136.33 pence in London on Thursday.
The Derby, England-based automotive retailer said the positive momentum experienced at the start of the calendar year continued through February and March.
In a trading update for the financial year ending March, Motorpoint said fourth quarter retail volume increased by around 9% year on year.
As a consequence, January, February and March were all profitable months, it said.
Motorpoint said its full-year pretax loss is now "anticipated to be at the favourable end of management expectations."
"Consumer demand has picked up, and we have benefitted from the numerous enhancements made to our digital presence during the past year which, among other things, is generating strong website traffic," Motorpoint remarked in a statement.
Chief Executive Officer Mark Carpenter commented: "I am delighted that the difficult conditions experienced in 2023 have eased in [the fourth quarter]."
"We are achieving growth, increasing stock turn and improving margins, and this is expected to continue into [financial 2025] as supply improves following recent new car registration growth."
AJ Bell's Mould thinks the backdrop "should improve further for Motorpoint once the Bank of England starts to reduce interest rates."
"That action could make households feel as if the worst is over and that they are able to get their finances back on track. It also helps that wage growth has been fairly decent, on average."
House broker Shore Capital called the update "encouraging," noting momentum through the fourth quarter has been "robust and building, with positive volumes and improving margins driving profitability each month."
"Such momentum implies upward pressure to forecasts if sustained into [financial 2025] we will know more in mid-June, though evidence for a recovery is building," the broker added.
"We reiterate our view that Motorpoint has a high-quality and vastly experienced management team, a distinctive operating model and the right omnichannel strategy to succeed in a normalised vehicle market. Such times may be upon us."
By Jeremy Cutler, Alliance News reporter
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