Macklin Motors owner eyeing further acquisitions as profits stay on track despite rising costs
In an update to investors, the group said its business performance for the full financial year would likely be in line with current market expectations.
Vertu noted: “The group delivered a strong performance in the first half of the financial year, however, there remains uncertainty around vehicle supply and the macro environment for consumers which is likely to be affected by rising energy costs and inflation in general, so profitability should be more weighted in the first half of the year.
The company said the limited supply of new vehicles in the UK had continued due to the “dislocation of global supply chains”, particularly around semiconductors. UK market and group vehicle volumes in the new retail and fleet channels consequently saw year-on-year declines.
New vehicle order bank levels remain high, bosses noted, with nearly 13,000 new retail orders awaiting delivery and strong fleet and commercial order banks also in place.
Gross margin generation from new vehicle sales was higher than last year, despite lower volumes, due to stronger margins.
Virtue, which runs a network of 160 outlets across the UK, mainly under the Bristol Street Motors, Vertu and Macklin Motors brands, said there were also used car supply constraints. This, combined with the prior year comparative period reflecting pent-up demand post-lockdown, resulted in lower used car volumes on a like-for-like basis.
Wholesale prices for used vehicles stabilized after a period of strong growth. While gross profit per unit remained above normal levels, it was down from the “very high” levels seen in the fiscal year ending February 2022, the group added.
The company’s high-margin aftermarket services generated revenue above prior-year levels on a like-for-like basis. In the service departments, retail sales increased as the group builds customer loyalty and continues to penetrate the classic car servicing market more effectively.
Operating expenses increased year-over-year due to higher costs and the removal of government support for corporate rates, which reduced costs in the first half of 2021 by more than $5 million. pound sterling. Costs would be in line with planned levels as a percentage of revenue.
The company is currently enjoying “below market rate” electricity costs under a fixed contract expiring at the end of this month. There will therefore be an increase in the group’s energy cost in the second half of the year.
Vertu added: “Management remains focused on delivering operational excellence in cost, conversion and customer experience. In addition, the group continues to evaluate and execute acquisition opportunities as it seeks to achieve its primary strategic objective of value accretive growth.
“The group has more franchise relationships than any other UK group and yet talks are developing positively with a number of franchises the group does not currently represent, which is likely to lead to further scale growth.”
Scottish showroom owner Macklin Motors announces further recovery in car sales