Vertu Motors has reported a 15.5% drop in adjusted profit before tax performance to £29.3 million for the year to February 28, 2025, as cost controls and strong aftersales helped offset a weak retail new car market.
This is despite a 1.6% increase in revenues to £4.8 billion over the same period, resulting in a 0.61% return on sales (ROS).
The 198-strong group’s aftersales division delivered a robust performance to help bolster Vertu’s figures, with like-for-like revenue increasing by 5.8% and gross profit rising by £12.3m in the core group.
Completion of the rollout of an in-house deferred payment service, ‘Pay Later’ helped improve conversion rates within the group’s service operations and this helped to grow aftersales revenues.
Used vehicle gross margin improved to 7.1%, though margin expansion was below expectations due to reduced consumer confidence.
Vertu undertook “significant cost reduction measures” to offset an anticipated £10 million annualised cost increase from April 2025, resulting from the Autumn Budget.
These measures included the cessation of Sunday opening in sales, use of technology to increase efficiency, headcount reductions and dealership closures where required return rates were not met.
The group reported a strong cash inflow of £45.8m from working capital in the second half, contributing to a year-end net debt position of £66.6m, which was lower than market expectations.
A final dividend of 1.15p per share was recommended, bringing the full-year dividend to 2.05p per share.
Chief executive Robert Forrester said: “With challenging market conditions during the year which saw the lowest new retail car market for 25 years, we have focused on the things we can control and delivered increased new retail electric vehicle sales ahead of the market and strong performances in used cars and aftersales.
“In addition, cash generation was robust in the second half with net debt levels reduced compared to market expectations.
“In anticipation of Government related cost pressures effective April 1, 2025, the business undertook a significant cost reduction programme to fully offset the impacts and position the group for the future.”
Forrester said trading in March and April has been stronger than the prior year, as the UK retail new car market improved from its lows and the group continued to focus on “operational excellence”.
The group’s high margin aftersales business is also contiuning to see positive results this year.
Further expansion with Chinese brands expected
Vertu has also been active in portfolio management, disposing of £5.6 million of non-core assets and adding new Chinese brand outlets like BYD.
Further expansion with new entrant Chinese manufacturers is currently under consideration, with Vertu expecting them to continue taking an increasing share of the new car market in the coming years, which it described as “a major transition in market share in the future”.
The group announced a £12 million share buyback programme in February 2025, with £2.2 million utilised in the purchase of 4.2 million shares by April 30, 2025.
The company remains acquisitive and stated that it will continue to “take advatange of opportunities as they arise”.