8th Mar 2016 09:16
LONDON (Alliance News) - Vertu Motors PLC on Tuesday said its full year results will be ahead of current market expectations and will include "record revenues and profits", as sales continue to grow across all of its divisions.
The automotive retailer, which has 126 sales and aftersales outlets within the UK, also said it is considering its options to raise further capital, either through debt or an equity issue, to pursue acquisitions.
"The board has identified a number of near-term acquisitions comprising both premium and volume dealerships which would, if completed, augment existing franchises in key geographies and also add a new manufacturer partner," said the company.
"In order to finance such opportunities and the group's on-going growth strategy, the board is considering options to raise further capital for the group, including a potential equity issue and a review of its borrowing facilities with a view to introducing property backed, fixed interest, long-term debt," Vertu added.
Vertu would launched that pursuit of new dealerships on the back of a successful financial year ended February 29, as all of its units continued to report rises in revenue and sales volumes.
In the five months to the end of January, Vertu said total revenue was 18% higher year-on-year, whilst like-for-like revenue has increased by 7.2%. Revenue from services increased 13% whilst like-for-like sales revenue rose 5.6%.
New retail vehicle sales increased 13% in the five-month period compared to a year ago, motability vehicle sales increased 2.3%, new commercial vehicle sales rose 25%, new fleet car sales increased 2.8% and used retail vehicle sales were 17% higher than a year earlier.
Although all the units have seen overall sale volumes rise, like-for-like sales of motability vehicles in the five-month period were down 3.7%, whilst like-for-like sales of used retail vehicles fell 2.8%. Like-for-like sales of used retail vehicles were up 11%, new commercial vehicle sales rose 15%, and new retail vehicle sales increased by 6.5%.
Vertu also said its high-margin aftersales business continues to grow and has improved its customer retention levels. The company said aftersales margins rose across the entire division, including for work carried out related to service, parts, accident repair centres and petrol forecourts.
"These improvements in the group's aftersales performance are a direct result of the group's strategies in the key areas of customer retention into service and vehicle health checks performed on all vehicles visiting the Group's service departments," said Vertu.
The company said it sees the UK new car market stabilising at current levels, adding the main supply push is coming from European manufacturers, which likely to remain for the medium term due to the importance of the UK market in the European context.
"March remains the most significant month for the UK motor retail sector profitability due to the registration plate change. The order book for retail new cars on a like-for-like basis was 11.6% ahead of last year as at February 26, 2016 and whilst there is a long way to go to deliver a successful March, current trading is clearly robust," said Vertu.
"In the context of a long period of rising new car sales, the used car market and aftersales area are also likely to show growth. The group's marketing and retention strategies are delivering growth in market share in these important, higher margin channels," the company added.
Vertu shares were up 2.8% to 72.97 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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