Vertu reports forecast-beating FY numbers, reinstates guidance
Car dealership Vertu Motors reported above-forecast final results on Wednesday, and predicted a strong 2022 following a bumper start to the year.
Revenues in the year to 28 February, dented by lockdowns repeatedly closing showrooms, fell to £2.55bn from £3.06bn a year earlier. On a like-for-like basis, sales declined 21.6%.
However, pre-tax profits rose from £7.3m to £22.4m after government support totalling £27.8m helped offset losses incurred when showrooms were closed. The gross margin also improved, to 11.8% from 10.9%.
Chairman Andy Goss said: "The business emerged from the first lockdown stronger in many ways for the experience.
"Trading conditions throughout the summer months were bolstered by pent-up consumer demand. The period also saw the additional benefit of cost reductions, achieved through the roll out of technology developed during lockdown, which enhanced efficiency across a number of different areas of the business."
Various restrictions were re-introduced from November but the Aim-listed firm continued trading on a click and collect/home delivery basis.
Looking to the current year, like-for-like sales were ahead 135% year-on-year, with adjusted pre-tax profits of £19.2m against £14.8m in the same two months in 2019.The group now expects adjusted pre-tax profit for the year to be in the range of £24.0m to £28.0m.
It also expects to resume dividend payments from January 2022.
Chief executive Robert Forrester said: "We have started the new financial year very strongly, have generated record levels of cash and have a very strong balance sheet.
"Brexit uncertainty is now behind us and we are exceedingly well-placed to benefit from the changes and opportunities which are ahead of us."
As at 1130 BST, shares in Vertu were ahead 2% at 46.0p.
Sanjay Vidyarthi, analyst at Liberum, said: "Vertu’s market-leading omni-channel strategy has supported sales and let to a very strong start to the 2022. We increase full-year pre-tax profit estimates by 49%, allowing for some caution due to new car supply constraints.
"Vertu remains our top pick in the sector due to the track record, strength of management and balance sheet."
Liberum also increased its price target, to 80p from 60p.