Marshall Motor reports 'resilience' in lockdown-impacted first half

Marshall Motor reported a “resilient” first half performance on Tuesday, as its revenue fell to £895.3m, from £1.18bn a year earlier.

The AIM-traded vehicle dealer said its gross profit for the six months ended 30 June was £95.2m, falling from £135m year-on-year, although its underlying operating expenses narrowed to £98.8m from £114.9m.

Its underlying operating loss for the first half was £3.6m, swinging from a profit of £20.2m in the first six months of 2019.

Basic underlying losses per share totalled 11.2p, compared to earnings of 15p per share a year ago.

Marshall’s net assets fell to £190.5m from £200.7m year-on-year, although its adjusted net cash rose to £27.4m from £5.8m, and its reported net debt narrowed to £77.5m from £82.2m.

It put the improvement in its cash position primarily down to “significant” working capital inflows and the VAT payment deferral scheme.

Marshall’s £120m revolving credit facility had been extended in July until 2023, with covenant amendments agreed.

The board declared no interim dividend for the period.

On the operational front, Marshall said trading was “significantly ahead” of the market in the period before the Covid-19 lockdown.

For the first half. like-for-like new vehicle unit sales were down 37.7%, which the board noted was a “strong outperformance” compared to market registrations, which were down 48.5%.

Like-for-like used unit sales were down 31.8%, which was described as a “pleasing result” given the impact of the lockdown on franchised retailers, while like-for-like after sales revenue was down 28.5%, which was called a “strong performance” in the current environment.

Looking at the impact of the pandemic, Marshall’s said it had to close all of its business from 23 March to 1 June - other than 62 strategic after sales operations, although it maintained a retail presence online and by telephone to support customers.

The board described taking disciplined cost mitigation and cash preservation actions, and said it used the Coronavirus Job Retention Scheme (CJRS) to protect the employment of furloughed colleagues on company-enhanced terms, with 88% of staff now back to work.

A “detailed reactivation plan” had been implemented to reopen the business under revised, “Covid-19 secure” operating procedures, with Marshall reporting an “encouraging” sales performance since 1 June.

“Despite the significant challenges presented by Covid-19, the group has delivered a resilient first half performance and once again outperformed the market,” said chief executive officer Daksh Gupta.

“Since full reopening under Covid-19 secure guidelines on 1 June, trading has been robust and our important Q3 order take is encouraging.”

Gupta said the impact of Covid-19 would accelerate the rationalisation and consolidation of the UK franchise dealer network.

“With the group's excellent brand partner relationships, strong balance sheet, recently renewed £120m revolving credit facility, depth of management team and highly engaged colleagues, the group believes it is well placed to capitalise on value accretive growth opportunities and is therefore well placed to deliver long-term shareholder value.”

At 0905 BST, shares in Marshall Motor Holdings were up 3.2% at 129p.