3rd Mar 2020 12:20
(Alliance News) - Vertu Motors PLC said Tuesday it expects financial 2020 results to be in line with internal expectations, as like-for-like revenue fell in the first five months of its financial second half.
In the five months to the end of January, the car dealership said total revenue slipped 2.7% with like-for-like revenue falling 2.1%.
Service revenue, however, was up 3.9%, with like-for-like service revenue rising 5.4%. Vertu said its aftersales margins rose to 46.3% in the recent period compared to 44.7% in the same period the year before.
"Pricing disciplines, the performance of rigorous vehicle health checks, and the increasing use of video technology to aid sales conversion, contributed to a growth in average invoice values on retail work to record levels," Vertu added.
Total used retail vehicle volumes slipped 3.1%, and fell 2.3% on a like for like basis.
Vertu said the UK used vehicle supply market has "tightened", as new the new car market declined - which, in turn, drove fresh supplies of part exchanges into wholesale markets.
"Pricing has therefore increased from the low point of the early summer price correction. The group seeks to balance volume and margin in order to maximise gross profit and consequently, in light of the market trends, the group's like-for-like volume of vehicles sold in the period fell," Vertu explained.
Like-for-like gross profit per unit grew 6.7% to GBP1,229, however, with strengthening margin percentages returning to more normalised levels compared to the prior year period, Vertu said.
New retail vehicles sales volumes were down 9.9%, and 9.4% on a like for like basis. The UK new vehicle market recorded 2.3 million registrations in 2019, a decline of 2.4% on 2018 and the third year of decline from the 2016 peak of 2.69 million, Vertu noted.
New fleet car sales volumes were up 14%, but commercial vehicles volumes decreased 9.5%.
"I am pleased to report that the board expects the trading performance for the group to be in line with its overall expectations. This result has been achieved through the deployment of discipline, hard work and sector leading systems," Chief Executive Robert Forrester said.
He continued: "Scale will become an increasingly important success factor as the sector evolves and the current pipeline of potential acquisition opportunities is strong, with our robust balance sheet only being deployed after rigorous capital allocation testing."
Vertu Motors' financial year ended at the end of February.
Shares in Vertu Motors were 3.1% higher in London on Tuesday at 31.95 pence each.
By Paul McGowan; [email protected]
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