In the 12 months to January, motor and bridge finance firm S&U (SUS) saw its pre-tax profits climb for the twentieth year in a row. Amid the ongoing collapse in consumer spending, it seems highly likely that the record won’t be extended.
Indeed, in a sign of the fog hanging over a sector as data-rich as the UK’s second hand car market, the group has joined the growing army of businesses which have stopped issuing forward guidance. The next update is scheduled for 9 June.
Until then, management expects positive free cash flow. That may not be much of a surprise, as this year started with receivables up 9 per cent to £302m, and lending criteria has understandably tightened in recent weeks. Collections were trending “just below normal” in March, and will be a key barometer of future losses.
Undaunted, chairman Anthony Coombs vowed S&U will “emerge from the maelstrom stronger, fitter and more determined than ever before”. The decision to pay a final dividend of 50p a share nonetheless seems out of step with other lenders’ treasury management, though Mr Coombs defended the move as an “obligation to shareholders”, given last year’s profitability and the board’s confidence in an eventual recovery.
Analysts at Peel Hunt expect adjusted earnings of 255p per share for the 12 months to January 2021, rising to 273p in FY2022.
| S&U (SUS) | ||||
| ORD PRICE: | 1,700p | MARKET VALUE: | £ 206m | |
| TOUCH: | 1,640-1,700p | 12-MONTH HIGH: | 2,500p | LOW: 1,420p |
| DIVIDEND YIELD: | 7.1% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 1,481p | NET DEBT: | 66% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 45.2 | 19.5 | 134 | 76 |
| 2017 | 60.5 | 25.2 | 171 | 91 |
| 2018 | 79.8 | 30.2 | 204 | 105 |
| 2019 | 83.0 | 34.6 | 233 | 118 |
| 2020 | 89.9 | 35.1 | 240 | 120 |
| % change | +8 | +2 | +3 | +2 |
| Ex-div: | 18 Jun | |||
| Payment: | 10 Jul |
