Vertu Motors has outperformed market expectations with a £39.3 million adjusted profit before tax figure on a £4 billion turnover for the full year to 28 February. This is a new record for the business.
The results also give an insight into the OEM strategy changes from Mercedes and JLR.
While the £39.3m profit figure was the firm’s second highest, last year’s £80.7m was seen as an anomaly as the entire industry caught the tailwinds of short supply and high demand resulting in significantly improved margins, plus Government support of £6.6m.
The results also include the acquisition of the majority of the Helston group.
Vertu’s profit before tax figure after non-underlying items, including a significant one-off legal and financial due diligence cost of the Helston purchase, was £32.5m.
Commenting on the acquisition and the performance pos-results, CEO Robert Forrester said: “The Helston businesses have now been integrated into our systems platform. The acid test was how our core Group and new dealerships performed in March and April. I am delighted to report that the trading result post year end has been encouraging and gives confidence for the year ahead.
“The reported results reflect a strong profit and excellent cash performance, both ahead of expectations. As a result, we have chosen to propose a significantly increased final dividend, delivering a 26.5% higher dividend for the year as a whole. The business is in a healthy financial and operational position to further develop and gain from the benefits of scale as sector consolidation continues.”
Vertu also reported that vehicle supply was becoming “evident” but has a “continued high group order bank of high margin” orders.
Commenting on OEM moves to the agency retail model, Forrester said: “The group has long operated on an agency basis for a significant proportion of fleet and parts sales. The first of the Group’s significant manufacturer partners to operate the agency model for new retail sales was Mercedes-Benz passenger cars which moved to a genuine agency model on 1 January 2023. The implementation has been successful from a systems perspective and the Board will monitor how the change impacts volume and profit levels, albeit remaining cognisant that the change to agency is, of course, only one of a number of factors which impacts volume and profit. The Volkswagen Group brands and Volvo are likely to be the next in line for agency implementation.”
Vertu’s results also revealed that while the group added 31 franchises over the year, it is set to reduce its Jaguar portfolio from six to one, under JLR’s Reimagine strategy, with £1.5m of goodwill written off in the year.