Vertu Motors PLC (LON:VTU), the car dealer, has said it is back in the black again this year as new orders have recovered and used sales hit a monthly record.
Underlying profits in the year to end-July 2020 were £7.4mln, which Vertu said was significantly ahead of the prior year and its original business plan.
Between March and June, Vertu made a loss of £5.2mln and so has made a year to date adjusted profit before tax of £2.2mln, it added.
The company said it continued to see robust retail sales demand in the new and used car and van segments in July, although fleet volumes were more subdued, with a 20% jump in new retail sales in July.
In an AGM trading update, Robert Forrester, Vertu's chief executive commented: “A robust recovery in customer demand for our vehicles and servicing has continued, aided by our investments in omnichannel retailing.
“A very successful 0% finance used vehicle sale event was executed in a majority of the group's English dealerships and this, together with strong used car margins, aided the delivery of a record month for used car profits. The group's high margin aftersales operations also performed well, delivering year on year growth in revenue, gross profit and margin.”
Vertu said it is keen to grow the scale of the group's franchised dealership operations centred around key manufacturer partnerships and investment in its four major retailing brands, Bristol Street Motors, Farnell, Macklin Motors and Vertu Motors.
“Several growth opportunities are currently being evaluated in terms of acquisitions,” it added.
Liberum said that July benefited from £1.3m of furlough grants (compared with £3.3m in June) and management expects remaining furloughed staff to be back at work by the end of August.
The July result absorbed £0.7mln of costs relating to previously flagged headcount reduction which has now been completed and should result in £10mln of annualised savings.
The spectre of rising unemployment and Brexit, as well as continued COVID-related uncertainty, may make for a tough trading environment but the broker says it expects carmakers to concentrate their relationships amongst the strongest dealer groups, with Vertu in prime position.
The broker has a target price of 50p.
Shares rose 14% to 28.6p.
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