Motorpoint warns over first-half profit

Motorpoint warned on Tuesday that first-half profits were set drop on the year as margins take a hit from high levels of supply.

In a statement ahead of its annual general meeting, the company said gross margin has been below last year's strong comparative period, dented by "unusually high supply levels". As a result, profits for the six months to the end of September 2019 are expected to be below the same period last year.

Still, the auto retailer said the margin trend has improved in July and the company is well placed to take market share and confident in its full-year outlook.

"Motorpoint has achieved revenue growth over the first three months of the financial year despite the challenging consumer environment and ongoing uncertain political backdrop," said chairman Mark Morris. "The board believes that this growth reflects further encouraging market share gains against a declining market."

At 1100 BST, the shares were down 0.9% at 212p.

Broker Liberum said: "Should the July margin trend continue, then the combination of cautiously set FY20E forecasts and some scope for cost efficiencies means that FY20E profit before tax expectations can still be met. Given how tough the market has been, we see this as a reassuring update."

Liberum maintained its 'buy' rating and 277p price target on the stock.