Macklin Motors owner Vertu delivers bumper results

Vertu said trading since the end of April had been strong as it reported a jump in annual profits. Picture: Contributed
Vertu said trading since the end of April had been strong as it reported a jump in annual profits. Picture: Contributed
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Macklin Motors owner Vertu has given an upbeat outlook despite a bumpy industry backdrop after booking record full-year results.

The Gateshead-headquartered group, which trades under the Macklin banner in Scotland and also runs the Bristol Street Motors and Farnell brands, reported a 16.5 per cent hike in revenue to just over £2.8 billion as it closes in on the £3bn sales mark.

• READ MORE: New car market goes into reverse ahead of tax changes

Pre-tax profits in the year ended 28 February rose by 14.6 per cent to £29.8m. A proposed full-year dividend of 1.4p, up from 1.3p, represents an annualised cash payout of £5.5m, compared with £4.9m the year before.

The firm, which has a network of 124 sales and aftersales outlets across the UK, said the trading performance had been driven by recently acquired businesses, a strong used car market and growth in the higher-margin service area.

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Chief executive Robert Forrester said the outlook remained “encouraging” with robust trading in the two months since the end of its last financial year.

Industry commentators have warned of a potential slowdown in new car sales amid a shake-up in vehicle excise duty that has seen the tax rate on many popular models soar, a squeeze on consumer spending and uncertainties surrounding Britain’s exit from the EU.

• READ MORE: Scott Reid: Tax shake-up risks motor industry crash

Forrester said: “Since our inception ten years ago, Vertu has remained focused on consolidating the UK automotive retail sector to grow a scaled and sustainable dealership business.

“Today’s results, our fifth consecutive year of growth, evidences our continued delivery of this strategy. Significant acquisitions have been integrated through the year and have enriched the premium mix of the franchise portfolio.”

He added: “Trading up to the end of April 2017 has been strong giving the board confidence for the future.”

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During the year, total used vehicle sales volumes were up by 13.9 per cent, while new car sales increased by 4.4 per cent, although they were down by 6.4 per cent on a like-for-like basis.

Analysts at Canaccord Genuity, which has a “buy” recommendation on Vertu’s shares, said: “Current trade is strong following the expected pattern of a pull forward of new car demand into March and a consequently slower April.

“[Full-year 2018] will see a full-year contribution from last year’s acquisitions as well as the elimination of £700,000 of losses from businesses that have been exited. There is a focus on cost control to offset underlying inflationary pressures.”

Zeus Capital analysts noted: “The group has very strong foundations in place, We… believe Vertu remains well positioned to deliver strong growth over the medium term.”

Lookers, owner of the Taggart brand north of the Border, today said it had made a “pleasing start” to its new financial year, writes Gareth Mackie.

The group reported a 7.4 per cent increase in new car volumes during the quarter ending 31 March, while it pointed to “buoyant” conditions in the used market.

“Some of the increase in the new car market is likely be a result of the increase in vehicle excise duty from 1 April 2017, which will have had the effect of potentially bringing forward sales from April to March and this appears to be confirmed by the April new car registrations,” Lookers told investors.

“However, it is not possible to estimate the impact of this on volumes until we have seen the full impact during the second quarter.”

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