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Marshall Motor drives into loss

The automotive retailer's sales mix edged slightly towards used cars
August 18, 2020

Marshall Motor (MMH) is hoping to break even this year on an underlying pre-tax profits basis, having been pushed into a half-year loss by the coronavirus pandemic. The motor dealer outperformed a dire new car market over its first half, and it also remains alert to acquisition opportunities, with consolidation widely expected to take place within the car retail sector.  

IC TIP: Hold at 122p

New car sales fell by just over a third, compared with an overall market decline of nearly a half. Marshall’s sales mix shifted slightly towards used cars, however. While sales here inevitably declined, too, used car sales were partially supported by a rush for private transport following the pandemic.

Marshall’s operating cash flow almost doubled to £72m compared with last year’s first half, largely driven by a significant overall decrease in its inventories. Manufacturers offered support during the retailer’s tumultuous second quarter, removing targets and guaranteeing the payment of bonuses, which helped support the retailer’s cash flow. 

Having completed the acquisition of a Volkswagen dealership last month, Marshall envisages a consolidated market populated with larger dealer groups and more diverse franchise rosters. It added 20 businesses last year via acquisitions or start-ups. 

Investec forecasts full-year 2020 pre-tax losses and losses per share of £0.1m and 0.1p, respectively, rising to pre-tax profits and earnings per share of £15m and 14.9p in 2021.

MARSHALL MOTORS (MMH)  
ORD PRICE:122pMARKET VALUE:£95.4m
TOUCH:120-130p12-MONTH HIGH:163pLOW: 80p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:244p*NET DEBT:41%
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20191.1814.814.62.85
20200.90-10.7-15.8nil
% change-24---
Ex-div:na   
Payment:na   
*Includes intangible assets of £119m, or 152p a share