Vertu saw revenues grow 18%, leading to record PBT and EPS
Companies: Vertu Motors PLC
The automotive retailer, Vertu Motors published its H1 interims this morning, reporting record revenue for the period as its proven growth strategy and historically low interest rates helped group increase revenues by 17%.
The Gateshead-based firm saw revenues grow 17.7% to £1.45bn, with record profit before tax of £18.7m (+14%), and EPS of 3.87p. The company said the results had been delivered through improvement in its recently acquired businesses, a strong used car performance and growth in the higher margin service area.
Discussing Brexit, the company said the result of the EU Referendum had not "materially" impacted consumer confidence and the group had not experienced significant change in customer behaviour:
"We remain in a low interest rate environment with record high levels of employment, both of which are providing a robust foundation for our market."
The company said the aftersales market, its highest margin activity, remained strong and in conjunction with its customer retention strategies, provided confidence regarding the continuation of a strong aftersales performance:
"The used vehicle market remains buoyant, underpinned by stable residual values. The Group continues to perform strongly in used vehicles, and the focus on the continuous development of the Group's used vehicle marketing provides the Board with confidence regarding the sustainability of performance in this channel."
City stockbroker Liberum said today's update proved Vertu's strategy was continuing to deliver, whilst Zeus Capital analyst Mike Allen said Vertu had seen another record performance for H1 2017, with adj EPS +4% ahead of his firm's expectations:
We are maintaining our FY forecasts despite softer new car sales, as we have confidence in its aftersales and used car business accounting for 72% of gross profit. The shares and indeed the sector look oversold to us, and while there could be modest earnings downside in 2017, we believe more significant EPS risk has been factored in.
Also discussing today's results were N+1 Singer, who said:
"Interim growth of 15% and a positive trading performance in Sept, the key plate change month, means Vertu is well on track to deliver FY expectations. It has successfully been increasing its mix towards prestige brands through acquisition and it continues to assess further M&A to profitably grow the business.
Vertu has net cash and new details provided today about the capex cycle concluding in the year to Feb’18 underpin our views (see note 26 Sept) about FCF yields stepping up in cal18. Valuation (6.6x P/E) does not factor in good prospects in its largest most profitable segments."
Robert Forrester, CEO of Vertu said his firm's proven growth strategy had delivered another set of record results and confirmed that outlook for the remainder of the year was positive, underpinned by low interest rates and record high levels of employment:
"In the first six months of trading, our proven growth strategy has delivered a record set of results with increased revenues, gross margins and profits. We have continued to successfully grow the business, through both organic growth and the acquisition and integration of premium franchises, as we seek to build a balanced portfolio.
Consistent delivery of an outstanding customer experience continues to be a strong driver of the growth of dealership performances across the Group. This is demonstrated by the growing number of customers retained into the Group's aftersales businesses.
The Group's trading performance in the key September plate change month was strong. The Board anticipates that the Group's full year results will be in line with market expectations."