Gateshead’s Vertu says used vehicle values stabilised

Vertu CEO Robert Forrester

Shares of Gateshead-based Vertu Motors plc rose as much as 4% after it published a trading update for the five-month period to January 31, 2024, saying UK used vehicle values have stabilised in recent weeks following the post-October wholesale pricing correction.

Vertu, which has a network of 188 sales and aftersales outlets, said it “successfully increased used vehicle stock-turn and significantly reduced inventory levels to adjust to the changing market dynamics.”

The group said it delivered substantial £5.2 million growth (28%) in core gross profits from fleet and commercial vehicle sales.

It said the new vehicle UK retail market is down year on year with manufacturers discounting and enhancing offers to stimulate demand.

“Group aftersales operations delivered a robust performance with higher technician numbers, despite some parts supply challenges, with revenue and gross profit growth achieved,” said Vertu.

“Operating expenses fell as a % of revenue to 9.8% (FY23: 9.9%).

“Full year FY24 adjusted profit before tax expected to be broadly in-line with current consensus.

“Year-end net debt expected to be reduced ahead of market expectations to between £60m-£65m, reflecting strong working capital management and robust free cash flow generation.

“Over £10m of cash receipts from surplus property disposals anticipated in the next 12 months with proceeds above net book value.”

Vertu CEO Robert Forrester said: ”I am pleased with the team’s performance against a fast-changing market backdrop with used vehicle prices now stabilised at lower levels and consumer uncertainty impacting retail demand for new cars.

“Our resilient aftersales business continues to thrive aided by higher technician numbers. The work that has gone into cost control and optimising stock levels has contributed to an excellent cash performance.

“Despite the impact of the complex market dynamics on the short-term performance of the business, the current market presents opportunities for Vertu with our strong balance sheet providing; financial flexibility, portfolio of strong brands, robust and scalable systems, and a great team.”