Car dealer Vertu's stay-put in North pledge
Sep 2 2010 by Karen Dent, The Journal
FAST-GROWING car dealership Vertu is expected to motor ahead to full-year profits of up to £6.6m as it revealed further plans for expansion and committed itself “totally” to remaining headquartered in the North East.
The group – Britain’s eighth biggest motor chain, which has 67 dealerships and mainly trades under the Bristol Street Motors brand – plans to create 15 to 20 jobs at its Team Valley headquarters in the next six months.
It is also investing £2m in a state-of-the-art bodyshop in Newburn, which is being relocated from Newcastle.
The company, which has acquired a further eight dealerships so far this year, said like-for-like new car sales jumped by 6.7% in the five months to the end of July. And they rose by 35.2% when the new dealerships were taken into account.
Vertu chief executive, Robert Forrester, said: “I think we’ve all lived in more buoyant economic times, but I think the business has performed well in the last six months.
“For the full year, I think we’ll be in line with the market’s expectations made at the start of the year.
“I see that, slowly, the economy will be getting better.”
In its trading statement issued yesterday for the six months to the end of August, Vertu said that, nationally, private car sales were 11.8% ahead, boosted by the scrappage scheme which has now ended. Mr Forrester said: “We sold 4,000 cars last year on scrappage that we won’t sell again.
“The underlying retail market is better than it was this time last year, but in no way will that compensate for the loss of scrappage.”
However, Vertu said it was confident of outperforming the market during the second half of the year and also pointed to the benefits for the used car market after scrappage ended.
Like-for-like sales of secondhand cars rose by 5.2%, and by almost a quarter when its new acquisitions were taken into account.
But fleet and commercial vehicle sales were down by 7.1% in the five months to the end of July, although margins improved.
Vertu, which has an estimated £13m in net cash and a £70m property portfolio according to brokers Brewin Dolphin, is pushing ahead with its growth strategy.
It is opening Alfa Romeo, Fiat and Mitsubishi franchises in Worcester, and Ford and Mazda dealerships in Glasgow.
Mr Forrester said Vertu had no master plan of how many dealerships it wanted to open, and no ambitions to be the biggest motor group in the country.
But he said: “We will grow the group in the long term – we look 20 years ahead.
“We’ve got heads of terms agreed in a number of cases, with two set to complete in the next few weeks and months.”
And he said the AIM-listed group was “totally” committed to remaining a North East business.
“We are absolutely rooted in Newcastle and Gateshead,” he said.
Vertu, which posted pre-tax profits of £4.6m in the 12 months ending February this year, is expected to boost that figure to between an adjusted £5m (Panmure Gordon) and £6.6m (Numis Securities).
