Bristol Street Motors is beating the slump in new and used cars sales, according to half-year results from owner Vertu Motors.
Like for like new registrations rose by 13.5 per cent in the six months to August 31 – in contrast with a 7.3 per cent fall overall in UK sales – while same basis used car volumes gained 15.1 per cent.
And Vertu said that its dealerships were well ahead of the market in September, which despite being a key month for carmakers and retailers saw a big slump in sales overall.
Vertu, which has come from nowhere to rank as the country’s tenth biggest motor retailer since taking over Birmingham-based Bristol Street Motors, one of the country’s oldest and strongest dealerships, in March 2007, was cautiously optimistic about its prospects for the rest the year despite gathering economic storm clouds.
The group operates 44 dealerships and holds franchises from eight manufacturers, including Ford, Peugeot, Vauxhall and Citroen.
Figures issued by Aim-listed Vertu show that pro forma revenues rose by more than half to £423.5 million. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) came in at £5.2 million compared with £1.7 million last time.
Profit before tax, adjusted for exceptional costs, amortisation of intangible assets and other charges, rose to £3 million from £700,000.
A one-off charge of £900,000 arising mostly from redundancies - Vertu closed its under-performing Bristol Street Motor Nation site in Coventry and a van dealership in Birmingham - yielded a bottom line pre-tax profit of £1.9 million versus a loss of £400,000 at the same stage last year Cash flow generation was “strong” with an inflow of £5.9 million. Vertu said.
Net debt was driven down to £15.3 million as at August 31 compared with £16.9 million on February 29.
Chief executive Robert Forrester, who helped to establish Vertu after the Reg Vardy business of which he was MD was taken over, said: “I am pleased to announced that the group has delivered a performance which is above last year’s profit level on a pro-forma basis and the group has continued to gain market share with strong new and used like for like volume growth.”
He went on to warn: “The UK economic environment is increasingly challenging for the motor industry as a whole. However, despite this economic backdrop, we have maintained tight cost control over the business and continued to outperform the market in September.
“The next six months are going to be hard but by June 2009 we will be coming out the other side or at least be seeing light at the end of the tunnel.”
Mr Forrester said Vertu’s “strong balance sheet, positive cash flows and experienced and motivated management team” was well placed to drive performance ahead. A strong service and parts operation, which accounts for 45.7 per cent of gross profit, is another major asset. Also, Vertu is sitting on four surplus, empty freehold properties with a book value of £11.4 million.
The sites are proving harder to shift than would otherwise be the case, but disposals are progressing.
Underlying used car values are currently falling at the rate of five per cent a month and Vertu operates a “prudent policy” of writing down its stocks on a monthly basis.
The market meltdown month of September, which year on year UK sales slump by more than 23 per cent, saw Vertu meet all its manufacturer targets.