Motor retailer Vertu has seen turnover top £4bn for the first time, boosted in part by its largest ever acquisition.
Revenues at the Gateshead-based car dealership rose nearly £400m (11%) to £4.014bn, leading to an increase in dividends and a new programme of share buyback and investments across the business. Adjusted operating profit dropped 44% from £87.7m to £48.8m, but the the figures were ahead of its expectations, following a year of exceptional market conditions.
Chief executive Robert Forrest hailed a “critical” year for the company, which included the largest deal in its history when it bought the South West-based Helston Group, a deal it said had contributed to trading performance in excess of last year in the key months of March and April.
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The group has grown significantly by acquiring smaller car dealerships over its history, and said it remains open to other deals while also “pruning” its estate, including the sale of a site in Newburn, Newcastle, for £1.4m.
The group also continued to progress towards increasing its sustainability and to reduce its environmental impact. £1.2m has been invested in green technologies such as solar panels and LED lighting in the year, with a remaining £3.2m planned for such installations this year.
Mr Forrester said: “We had exceptional markets last year that were never going to get replicated again so we’re very pleased with this profit - the second highest we’ve ever made - and cash generation was really good and that allows us to do lots of things. We can build more dealerships, so we’re building a new dealership in Ayr, we’re extending our dealership in Chesterfield, we’re remodelling and increasing the capacity of our Exeter BMW dealership.
“It also allows us to invest heavily in training and development and to invest in our brands. We put a lot of effort into our brands - Vertu is on the back of the shirts for Sunderland, we’ve got the Vertu Motors arena, BTCC sponsorship for touring cars, and we’ve also sponsored the Theatre Royal, which I’ve always wanted to do. I think it’s a great asset to the city and gives us really good profile.
“It also allows us to invest in digitisation and our central functions in Gateshead, which are doing great work in terms of applying technology to our dealerships and I don’t think, in our industry, there is anything like Gateshead in the country.
“We’ve got some new dealerships coming on, including more coming in the North East over the next 12 months, and the business is in a pretty good state. The bedrock of the business is our colleagues and colleague satisfation scores are good, customer satisfaction scores are good, so we feel confident that we can go again. We can probably do some more acquisitions, which is earlier than I thought to be honest.”
The company’s results for the year to the end of February also show improved supply of new vehicles after a period of problems linked to the global shortage of semiconductors. But demand for electric vehicles was “cooling”, it said, in part due to rising electricity costs and infrastructure issues. Vertu also noted that high inflation was impacting on some customers.
Mr Forrester said: “There’s a lot of people in this country that can have an electric vehicle very effectively. My wife is a good example - she does 35 to 40 miles a week round Gosforth and Newcastle. We’ve got a charging point at home so there’s no problem there. Myself, I can do 1,200 miles in a week, which is slightly more problematic because the issue holding me back is the infrastructure around charging.
“The vast majority don’t travel that far so I don’t think that’s a major impediment and the range you can now do is quite astonishing. I think there’s a lack of joined-up Government but there’s no news there. The market will just magically conjure up electric vehicles and charging infrastructure for what is effectively a Government ban and diktat that in 2030 you won’t be able to buy a petrol or diesel car that will be cheaper, which is strangely odd because the technology in petrol and diesel cars now is very clean.
“So I think the Government has got its knickers in a twist on a number of issues around cars.”
In a separate announcement, Vertu signalled a new share buyback scheme of up to £3m.
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