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RNS Number : 8524B
Marshall Motor Holdings PLC
13 October 2020
13 October 2020
MARSHALL MOTOR HOLDINGS PLC
("MMH" or the "Group")
Trading, portfolio and business update
Marshall Motor Holdings plc, one of the UK's leading automotive
retail groups, issues the following update announcement regarding:
current trading, outlook for the year ending 31 December 2020
("Year") and portfolio and business changes.
Key Points
-- Further strong current trading; continued to significantly outperform UK new vehicle market
-- Targeting underlying PBT for the Year of GBP15m; previously break-even
-- GBP31.5m adjusted net cash at 30 September 2020 after
GBP10.9m early repayment of VAT deferral
-- Outlook remains uncertain given COVID-19 and Brexit
-- Further portfolio updates
Daksh Gupta, Chief Executive, said:
"Our strong culture, brand partnerships with scale, in-house
technology platform and online presence, coupled with our
exceptional colleagues have enabled the Group to significantly
outperform the wider automotive retail market through this
important post-lockdown trading period. Our operational performance
in August and September, in particular, was strong across all key
like-for-like new vehicle sales metrics and we have also delivered
significant like-for-like growth in both used car sales and
aftersales. On behalf of the Board, I would like to thank all of
our colleagues who have worked tirelessly through these
unprecedented times and contributed so magnificently in delivering
this performance.
Whilst this period of positive trading has been welcomed
following the significant impact of COVID-19 in the first half of
the Year, there remain a number of uncertainties regarding the
trading environment for the remainder of the Year and beyond. We
are also mindful that the market in Q3 was positively impacted by
pent-up demand for new and especially used vehicles, which, allied
to restricted supply, created favourable conditions from which the
Group was very well positioned to benefit. It is for these reasons
that we have taken appropriate actions in terms of limited business
closures and restructuring measures to ensure the Group is well
placed to meet these potential future challenges".
Current Trading
On 18 August 2020, the Group announced its interim results for
the six month period ending 30 June 2020. The Group reported that
in the period following the reopening of its showrooms in June, it
had performed strongly with an improvement in like-for-like* order
take throughout June, July and the early part of August. It also
noted that its key September order bank was building well and that
the business was targeting a break-even underlying profit before
tax performance for the Year.
The Group continued to trade strongly through the remainder of
August and, importantly, during the key plate-change month of
September. The Group benefitted from the ongoing release of pent-up
demand in both vehicle sales and aftersales following the COVID-19
closure period, new vehicle supply shortages, increased consumer
demand for private vehicles as a result of changing attitudes
towards public transport and an increase in first-time vehicle
users. As a result, margins were strong, particularly in used
vehicles. The limited supply of new vehicles also resulted in
significantly lower levels of pre-registration activity than
normal, which further benefited margins in both new and used
vehicles. As the supply to demand imbalance corrects itself in due
course, we expect margins to normalise.
In addition to these sector tailwinds, the Group significantly
outperformed the wider new vehicle market across all segments in Q3
and notably in September, with similarly strong trading in both
used vehicles and aftersales.
Variance
September Month SMMT Registrations MMH LFL to SMMT MMH Total
------------------- -------- ---------
New Retail
Units -1.1% +19.1% +20.2% +38.6%
New Fleet Units -7.4% +17.1% +24.5% +23.9%
Total New Units -4.4% +18.4% +22.8% +33.9%
Used Units - +15.7% - +29.4%
Aftersales
Revenue - +11.5% - +21.1%
Total Revenue - +16.3% - +28.0%
----------------- ------------------- -------- --------- ----------
Variance
Quarter 3 SMMT Registrations MMH LFL to SMMT MMH Total
------------------- -------- ---------
New Retail
Units +4.1% +16.0% +11.9% +36.0%
New Fleet Units -4.3% +4.7% +9.0% +13.8%
Total New Units -0.5% +11.8% +12.3% +27.9%
Used Units - +14.3% - +28.6%
Aftersales
Revenue - +8.0% - +18.1%
Total Revenue - +17.5% - +29.6%
----------------- ------------------- -------- --------- ----------
Variance
Year to Date SMMT Registrations MMH LFL to SMMT MMH Total
------------------- -------- ---------
New Retail
Units -28.9% -21.1% +7.8% -8.1%
New Fleet Units -36.7% -24.6% +12.1% -17.6%
Total New Units -33.2% -22.4% +10.8% -11.5%
Used Units - -16.4% - -6.0%
Aftersales
Revenue - -17.0% - -9.6%
Total Revenue - -15.5% - -7.1%
----------------- ------------------- -------- --------- ----------
September trading was particularly strong:
-- The Society of Motor Manufacturer and Traders ("SMMT")
reported that total new vehicle registrations in September were
down 4.4%. The Group significantly outperformed the market in
September, with like-for-like* total new vehicle sales up 18.4%.
Total new vehicle sales were up 33.9% as a result of strategic
acquisitions made in 2019.
-- The SMMT reported that new vehicle retail registrations were
down 1.1% in September. The Group's like-for-like new vehicle
retail sales in September grew 19.1%, significantly ahead of the
market, with total new vehicle retail sales up 38.6%.
-- The Group also performed strongly in fleet sales during
September with fleet sales up 17.1% on a like-for-like basis, with
total new fleet sales up 23.9%, compared with the SMMT's reported
fleet registrations decline of 7.4%.
-- Used vehicle sales in September were up 15.7% on a like-for-like basis and 29.4% in total.
-- Aftersales revenue in September was up 11.5% on a like-for-like basis and 21.1% in total.
-- Total revenue up 28.0% including the impact of acquisitions
with like-for-like revenues up 16.3%.
Financial Position
The Group's adjusted cash position also remains strong. As a
result, the Group believed it was appropriate to voluntarily pay
all amounts from which it benefitted under the Government's VAT
Payment Deferral Scheme which were not due to be fully paid until
March 2022. The Group is now up to date on all deferred VAT
liabilities and we are grateful for the support we received from
the Government in this regard. Notwithstanding this GBP10.9m
payment, the Group's adjusted net cash (excluding IFRS16) as at 30
September 2020 was GBP31.5m.
In August, the Group announced the renewal of its GBP120m
revolving credit facility until 2023. This, coupled with net assets
of over GBP200m, leaves the Group very well positioned to take
advantage of growth opportunities that make strategic and financial
sense for its stakeholders.
Portfolio and Business Update
The Group has continued to focus on driving operational
efficiencies and responding to a number of its brand partners'
network rationalisation strategies and the ongoing impact of
COVID-19.
As a result of a review of its portfolio, and with the full
support and approval of its brand partners, the Group has announced
the proposed closure of four sub-scale franchised dealerships:
Cambridge Hyundai, Bury St Edmunds Ford, Knebworth Vauxhall and
Poole Mercedes-Benz Commercial Vehicles. In the year ended 31
December 2019, these dealerships made a combined revenue
contribution of GBP47.3m and a loss of GBP0.1m.
In addition to these business closures, the Group also continues
to expand its representation with key brand partners. The Group has
secured the opportunity to represent Ford Commercial Vehicles in
Kings Lynn, which it will operate from its existing Kings Lynn Ford
freehold site. It has also agreed to represent SEAT at an open
point in Oxford, which will operate from a leasehold site adjacent
to the Group's existing JLR and Volkswagen businesses. Each of
these new businesses are expected to commence trading in early 2021
following completion of associated corporate identity upgrades.
As a result of the ongoing impact of COVID-19 on our operations,
which could last until at least Spring 2021, the Group has
identified a number of operational changes and efficiencies. The
Group is consulting with a limited number of colleagues regarding
the potential redundancy of their roles. These include certain
driver positions and a limited number of other roles across the
business. Over coming weeks, the Group will be engaging with
affected colleagues and will be seeking to mitigate the impact
where possible.
In line with the Group's historic commitment to apprenticeships
and in recognition of their importance for the future success of
its business, all of the Group's apprentices will have returned to
the business by the end of October.
Outlook
The business has continued to perform well and as a result of a
particularly strong trading performance in the important September
plate-change month, is now targeting an underlying profit before
tax performance for the Year of GBP15m.
This guidance is given in an environment where there are still
significant ongoing economic and social uncertainties caused by
COVID-19, together with the potential impact of the UK's departure
from the European Union on 31 December 2020, and so the risks to
the Board's guidance are much higher than in a normal year.
*Like-for-like businesses are defined as those that traded under
the Group's ownership throughout both the period under review and
the whole of the comparative period.
ENDS
For further information and enquiries please contact:
Marshall Motor Holdings plc c/o Hudson Sandler
Daksh Gupta, Chief Executive Officer Tel: +44 (0) 20 7796
4133
Richard Blumberger, Chief Financial
Officer
Investec Bank plc (Financial Adviser, Tel: +44 (0) 20 7597
NOMAD & Broker) 5970
Christopher Baird
David Flin
David Anderson
Tel: +44 (0) 20 7796
Hudson Sandler 4133
Nick Lyon
Bertie Berger
Nick Moore
Notes to Editors
About Marshall Motor Holdings plc ( www.mmhplc.com )
The Group's principal activities are the sale and repair of new
and used vehicles. The Group's businesses comprise a total of 117
franchises covering 23 brands, across 28 counties in England. In
addition, the Group operates six trade parts specialists, two used
car centres, six standalone body shops and one pre delivery
inspection centre.
In May 2020 the Group was recognised by the Great Place to Work
Institute, being ranked for a sixth year running with a position of
the 12th best place to work in the UK (super large company
category). This was the eleventh year in succession that the Group
has achieved Great Place to Work status.
Cautionary statement
This announcement contains unaudited information based on
management accounts and forward-looking statements that are based
on current expectations or beliefs, as well as assumptions about
future events. These forward-looking statements can be identified
by the fact that they do not relate only to historical or current
facts and undue reliance should not be placed on any such
statements because they speak only as at the date of this document
and are subject to known and unknown risks and uncertainties and
can be affected by other factors that could cause actual results,
and the Group's plans and objectives, to differ materially from
those expressed or implied in the forward-looking statements. MMH
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
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END
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