The auto-retail market has continued to be tough for Motorpoint (MOTR) in the six months to September, with the group seeing "unusually high pressure on margins" in the first half of FY2020. They recovered to a degree in the second quarter, but the group still reported a 130 basis point drop in the gross margin compared with last year.
However, the group has taken advantage of disruption within the auto-sales market. All of its sites took market share in the half, and it is due to open its 13th site, located in Swansea, before the end of the current financial year. This, along with the refurbishment of the Glasgow West site, will mean that the group's outlets will be within half an hour drive-time of 27 per cent of UK households, and the catchment extends to 47 per cent of households within 45 minutes.
But a £1.7m increase in overheads dented cash profit, sending it down 12.4 per cent to £13.4m. In response, management has gone on an efficiency drive, investing in a new IT system and appointing a chief technology officer to automate more of its processes, which should help to reduce headcount.
Broker Numis expects adjusted pre-tax profits to be flat at £22.9m in the coming year, but for EPS to jump to 20.4p, from 18.7p in 2019.
| MOTORPOINT (MOTR) | ||||
| ORD PRICE: | 265p | MARKET VALUE: | £241m | |
| TOUCH: | 258-265p | 12-MONTH HIGH: | 265p | LOW: 170p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 19p | NET CASH: | £10.3m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 529 | 11.5 | 9.3 | 2.5 |
| 2019 | 534 | 9.4 | 8.0 | 2.6 |
| % change | +1 | -18 | -14 | +4 |
| Ex-div: | 6 Feb | |||
| Payment: | 13 Mar | |||
