Car dealership group Vertu gears up for fresh acquisitions

Chief executive Robert Forrester pointed to group's strong balance sheet. Picture: Marc Schlossman
Chief executive Robert Forrester pointed to group's strong balance sheet. Picture: Marc Schlossman
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Vertu, the car dealership group that runs the Macklin Motors brand north of the Border, is putting its foot back on the acquisition gas pedal after giving an upbeat outlook despite a fall in annual profits.

The group, which has a network of 120 dealerships across the UK, reported a 9.2 per cent decline in adjusted profit before tax to £28.6 million for the year to 28 February. Overall revenues dipped 0.9 per cent to just under £2.8 billion.

The Gateshead-based company highlighted the strength of its balance sheet to fund growth opportunities and declared a full-year dividend of 1.5p per share, up 7.1 per cent on the year before.

Chief executive Robert Forrester said the firm was “getting back on the acquisition trail” after a slowdown over the past couple of years. Scotland was likely to figure in those growth plans, he added, with “a few things on the go”, including investment in new showrooms at some of its existing sites.

Forrester said: “We have closed what turned out to be a more challenging year for the sector, with the business in a strong position.

“We have been deliberately cautious on the acquisition front as pricing moved away from our investment valuation metrics. This trend is beginning to reverse and potential acquisition opportunities are increasing.

“Our strong balance sheet with net cash of £19.3m, together with our unutilised debt facilities, provides scope for further scaling-up of the business to drive value and further enhance shareholder returns.”

He added: “We are pleased with the performance of the group in March and April in all key areas. The board therefore has confidence for the full year.”

Last week, industry figures showed an upturn in overall new car sales on both sides of the Border, in what industry leaders branded “a welcome turn in fortunes”.

Across the UK, sales rose by 10.4 per cent year-on-year in April, while in Scotland the increase was a more muted 3.4 per cent.

The new car market has been hit in recent months by the squeeze on spending power, more punitive vehicle excise duty rates and strong deals on nearly new vehicles. Diesel sales have been further dented by concerns over additional levies in the face of environmental pressures.

Zeus Capital analyst Mike Allen said: “We believe the asset backing in [Vertu] remains compelling and it remains well positioned.”