Supply constraints underpin margins at Vertu Motors
Vertu Motors said in an update on Wednesday that constrained supply of new vehicles in the UK was continuing, due to “dislocation” in global supply chains and the impact on vehicle production.
The AIM-traded firm, which was holding its annual general meeting, said margins in both the new retail and fleet channels had remained strong as a result.
It said it had also seen supply constraints continue in used cars, which was having two effects.
“Firstly, combined with the comparative period reflecting post lockdown pent-up demand, it has resulted in the group seeing an expected significant decline in like-for-like used car volumes in May compared to the previous year,” the board explained in its statement.
“Secondly, the group has been able to maintain strong retention of gross profit on used cars, with per unit profit in May at above prior year levels, as used car prices stabilised.
“The group's high-margin after-sales departments benefited from additional working days in May, which drove revenues above prior levels.”
Vertu said it was continuing to make progress in its parts departments and accident repair centres.
“The market outlook remains unclear due to uncertainty of consumer demand and vehicle supply although new vehicle supply is anticipated to improve gradually in the months ahead.
“The group has had a strong start to the financial year but it is premature at this stage to indicate any changes to market expectations of the full year trading profits.”
Vertu’s management said it remained focussed on delivering “operational excellence” around cost, conversion and customer experience.
“In addition, the group continues to evaluate and execute acquisition opportunities as it seeks to deliver its core strategic objective of growth.”
At 0847 BST, shares in Vertu Motors were up 0.43% at 53.33p.
Reporting by Josh White at Sharecast.com.