Vertu success indicates recovery in car market.
FAST-growing motor dealership group Vertu is set to beat market expectations after reporting a recovery in the car market. Vertu, which has 95 dealerships across the UK and trades mainly under the Bristol Street Motors and Macklin Motors brand names, said like-for-like private new retail volumes grew by 13.6%, compared to the UK average of 11.7%.
The Tyneside-based business issued a trading update for the year ending on February 28 and said that in the five months to January 31, it achieved like-for-like growth in sales, gross profits and operating profits in the crucial vehicle service operations.
And orders for new cars for March - the most important month for new car sales because of the registration plate change - is ahead of last year, showing a "continued recovery in the retail market", Vertu said.
The company has bought an additional net 12 sales outlets in the past 12 months and is now the seventh largest UK motor retailer by revenue.
Vertu closed two accident repair centres last month and now operates seven accident repair centres.
Chief executive Robert Forrester said: It has been a busy and exciting year for the Group with 18 sales outlets added propelling Vertu''s dealership network to 95 sales and aftersales outlets across the UK, making it the seventh largest retailer in the sector by revenue. The Group continues to assess a significant number of acquisition opportunities as it pursues its objective of developing a scaled business in the automotive retail sector.
Analyst Panmure Gordon is now raising its forecast on the back of the strong update.
"We believe this is driven by improved gross profit per unit in its new car division, and to a lesser extent in used cars, driving positive operational gearing," it said.
"Indications that its March order book is ahead year on year also provides further evidence that an industry-wide recovery is well underway. We are raising our 2013E EPS forecasts by 5% on the back of this statement, but leave 2014E and 2015E unchanged with 26% and 20% growth already factored in driven by its acquisition strategy.
"The current valuation also looks low relative to the sector in the context of this industry leading growth. We therefore re-iterate our Buy recommendation."
Vertu, which was set up and listed on the AIM in 2006, is aiming to consolidate the UK motor retail sector.
Vertu will announce its full year results on May 15.
EXCITING YEAR Robert Forrester, chief executive of Vertu Motors
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|Publication:||The Journal (Newcastle, England)|
|Date:||Mar 2, 2013|
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