A mixed bag from Vertu Motors (VTU) at the half-year mark, although numbers from the car dealer were largely what analysts had expected. A resilient top line, up 8 per cent on a like-for-like basis, was set against a 30 basis point contraction in the group margin to 10.7 per cent. Management pointed to detrimental supply-side issues, including “depressed sterling levels weighing on the profitability of manufacturers supplying the UK market”, which continue to put new car margins under pressure, as well as operating expenses.
Rising net finance costs – a consequence of a slowdown in the car fleet market, which increased consignment stock interest (net of related income) – also bore down on statutory profits. But even if you strip out a £4.1m exceptional gain on a disposal from the 2017 half-year, adjusted pre-tax profits still fell 13 per cent to £18.1m. The introduction of the Worldwide Harmonised Light Vehicle Test procedure (WLTP) for inward sales to the EU has depressed demand for fleet vehicles. This has persisted into September, although chief executive Robert Forrester says that once Brexit-related uncertainty dies down, renewed momentum in the pound could ease several issues for car retailers.
Analysts at Zeus Capital expect pre-tax profits of £22.1m for the year ending February 2019, giving EPS of 4.4p, down from £28.6m and 5.7p in FY2018.
| VERTU MOTORS (VTU) | ||||
| ORD PRICE: | 39.2p | MARKET VALUE: | £148m | |
| TOUCH: | 39.2-39.4p | 12-MONTH HIGH: | 53p | LOW: 39p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 72p* | NET DEBT: | 3% | |
| Half-year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 1.45 | 24.2 | 5.0 | 0.55 |
| 2018 | 1.56 | 17.3 | 3.7 | 0.55 |
| % change | +8 | -29 | -25 | - |
| Ex-div: | 06 Dec | |||
| Payment: | 18 Jan | |||
| *Includes intangible assets of £107m, or 28p a share | ||||
