Currency is key. That’s the message to take away from these numbers, says Vertu Motors' (VTU) chief executive, Robert Forrester. Sterling’s depreciation has prompted manufacturers to curtail the number of new vehicles entering the UK market, and pushed selling prices up by around 5 per cent. Little surprise then that like-for-like new car retail volumes fell 14.7 per cent at Vertu, although strong pricing and cost discipline meant gross margins still grew. On an industry level, the new car retail market declined around 6.4 per cent over the same period, while new car and Motability gross profits fell 4 per cent at Vertu.
Investors are equally worried about margins in the used car division. But Mr Forrester says supply issues in this market have started to ease: as fewer customers trade in new vehicles, concerns over a bloated secondary market and falling residual values should subside. Sales volumes in this channel actually grew in the first half, but margins contracted, pushing total gross profits down £2.5m to £49.8m.
Analysts at Liberum expect pre-tax profits of £31.3m for the year ending February 2018, giving EPS of 6.3p, compared with £31.5m and 6.5p in FY2017.
VERTU (VTU) | ||||
ORD PRICE: | 46.25p | MARKET VALUE: | £182m | |
TOUCH: | 46-46.25p | 12-MONTH HIGH: | 52p | LOW: 38p |
DIVIDEND YIELD: | 3.1% | PE RATIO: | 6 | |
NET ASSET VALUE: | 67p* | NET DEBT: | £20.8m |
Half-year to 31 Aug | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2016 | 1.45 | 18.7 | 3.9 | 0.50 |
2017 | 1.45 | 24.2 | 5.0 | 0.55 |
% change | -1 | +29 | +28 | +10 |
Ex-div: | 07 Dec | |||
Payment: | 19 Jan | |||
*Includes intangible assets of £96m, or 24p a share |