Vertu Motors (VTU) has published record full-year profits at a time when motor dealers are faced with an FCA investigation into car financing and the prospect of regulatory strictures designed to get diesel vehicles off the road. An 18 per cent rise in operating profit to £32.1m suggests these issues have had little impact to date. But complacency is not an option, even though further government intervention, particularly in relation to toxicity charges or diesel scrappage schemes, is unlikely this side of the general election.
Used car and aftermarket sales underpinned the lion's share of profit, driven by volume growth and stable margins. The former segment stands to benefit from an exclusive five-year re-marketing agreement, signed post period-end, with BCA Marketplace (BCA), which will see cars from Vertu sold at BCA centres nationwide and also available to BCA Live Online buyers.
Management is encouraged by new car retail, although the general outlook for this market is far from certain. The signs are that we're entering the down-leg of the consumer credit cycle, borne out by faltering rates of new vehicle registrations. However, management pointed to an improving profit contribution on lower volumes as proof that improved cost discipline and scale benefits are working,
House broker Zeus Capital gives adjusted pre-tax profit of £31.5m for the February 2018 year-end, leading to EPS of 6.3p (from £31.5m and 6.5p in FY2017).
VERTU MOTORS (VTU) | ||||
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ORD PRICE: | 45p | MARKET VALUE: | £179m | |
TOUCH: | 45-45.3p | 12-MONTH HIGH: | 62p | LOW: 38p |
DIVIDEND YIELD: | 3.1% | PE RATIO: | 7 | |
NET ASSET VALUE: | 62p* | NET CASH: | £21m |
Year to 28 Feb | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 1.26 | 4.4 | 1.7 | 0.7 |
2014 | 1.68 | 15.8 | 4.2 | 0.8 |
2015 | 2.07 | 21.0 | 4.9 | 1.1 |
2016 | 2.42 | 26.0 | 6.1 | 1.3 |
2017 | 2.82 | 29.8 | 6.1 | 1.4 |
% change | +16 | +15 | +1 | +8 |
Ex-div: 29 Jun Payment: 31 Jul *Includes intangible assets of £96.1m, or 24p a share |