Vertu Motors sees £20m losses from lockdown in April and May
Car dealership Vertu Motors has revealed combined losses of £20 million for April and May due to the impact of the coronavirus lockdown.
The group said it also saw underlying pre-tax profits slump to £5.9 million in March – “well below” normal levels of profitability – as the Covid-19 crisis deepened and the UK was placed in lockdown.
But Vertu said the April and May losses were “significantly” better than the lockdown losses it first feared.
The firm, which has a network of 133 sales and after-sales outlets across the UK, said its car showrooms reopened across England on June 1 with social distancing in place, with Scottish outlets expected to resume trading in “due course”.
The crisis also saw the group’s statutory pre-tax profits crash 71% to £7.3 million in the year to February 29 after it took a £14.4 million hit relating to coronavirus.
But Vertu said on an underlying basis, full-year pre-tax profits were in line with expectations, dipping to £23.5 million from £23.7 million after taking costs linked to acquisitions and higher costs of car stocks.
Like-for-like revenues rose 1.2% over the year, it added.
Chief executive Robert Forrester said: “I have spent the best part of 20 years getting people into motor dealerships and the last two months effectively keeping them out.
“We entered the lockdown with a strong balance sheet, minimal use of used car stocking loans and excellent relationships with our banks, all of which means we have sufficient liquidity to weather this crisis.”
Vertu signalled it would be looking to strike more deals amid an “ambition to grow in scale” as the sector consolidates.
It said while the effects of coronavirus on the car dealership industry was unclear, it was likely to see a shake out of some players.
“Financial pressures on already stressed businesses in the sector, could lead to an acceleration of much needed franchise retailer capacity reductions in the UK and this should enhance volumes and returns for those remaining,” said Vertu.
The pandemic has come after an already difficult time for the sector, which has been knocked hard by a declining car market.