In This Article:
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Vertu Motors PLC (FRA:V2N) has a strong strategic position as one of the six supergroups in the UK with a wide geographic and manufacturer footprint.
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The company has a high-margin after-sales business, supported by a customer database of 2 million, which contributes significantly to profitability.
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A cost reduction program and a move to a single retail brand under the Vertu brand are expected to deliver GBP 5 million in medium-term savings.
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The company reported strong cash generation in the second half of the financial year, exceeding consensus net debt forecasts.
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Vertu Motors PLC (FRA:V2N) has implemented a significant share buyback program, justified by the share price being below tangible net asset value.
Negative Points
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Profits fell due to the zero emission vehicle mandate, which significantly disrupted the new car market.
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New vehicle gross profit generation dipped slightly due to a 22% fall in motability volumes.
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The company faced increased costs as a percentage of revenue, reflecting cost pressures and higher operating expenses from acquisitions and startups.
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Interest costs grew by GBP 1.6 million compared to last year, driven by increased manufacturer stocking charges and lease liabilities.
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The UK new retail market was the lowest in 25 years, leading to significant discounting of battery electric vehicles and impacting margins.
Q & A Highlights
Q: Can you elaborate on the impact of the Zero Emission Vehicle (ZEV) mandate on your financial performance? A: Robert Forrester, CEO: The ZEV mandate significantly disrupted the new car market, leading to a decline in profits. However, we saw a rise in margins due to a higher after-sales mix and strong cash generation in the second half of the financial year. We also implemented a cost reduction program and a share buyback to mitigate the impact.
Q: How did Vertu Motors perform in the new retail volumes for March and April? A: Robert Forrester, CEO: We experienced a 9% increase in like-for-like new retail volumes, outperforming the market. This was achieved despite a 22% fall in motability volumes. We earned high-level manufacturer bonuses, indicating strong performance.
Q: What are the key challenges and opportunities you foresee in the used car market? A: Robert Forrester, CEO: The used car market is supported by supply constraints, which underpin values. However, the increasing supply of battery electric vehicles may pose a risk to residual values. Despite this, our used car profits increased by GBP 0.9 million due to higher margins and efficient stock control.