(Alliance News) - Vertu Motors PLC on Thursday said it expects full-year profit to be below market guidance, thanks to "a number of negative external factors".
Shares in Vertu Motors were trading 21% lower at 66.68 pence each Thursday morning in London.
The Gateshead, England-based car dealership chain said profits for the year ending on February 29 are likely to be below current market expectations, a much more pessimistic outlook than that reported in its interim results on October 4.
Vertu also said on Thursday that in the quarter that ended on November 30, gross profits from used car sales were below anticipated levels.
The UK's used vehicle market, Vertu said, experienced a "significant reduction" in October and November. Vertu attributed this to higher supply colliding with lower demand thanks to higher interest rates and high vehicle prices affecting affordability. In particular, retail demand for battery electric vehicles has become "increasingly muted".
Vertu added that the average 4.2% value drop over the last two months represents "record levels of value decline". This was a dramatic change from the start of the quarter, when values "were approximately 20% higher than in January 2021 and had been resilient since the pandemic."
More positively, Vertu said aftersales demand remained strong during the period with increased technician resource levels driving higher revenue and core gross profit compared to last year. Additionally, costs were "well-controlled" as Vertu continued to prioritise controlling operating expenses, and gross profit generation rose along with volumes for fleet and commercial vehicles.
"The current consumer environment remains volatile and recent trends of sluggish new car retail demand and weakness in used car pricing are likely to persist for some months," commented Chief Executive Officer Robert Forrester.
However, he added: "The group has a strong balance sheet and long track record of operational excellence and financial discipline.
"These attributes mean we remain very confident in our ability to take advantage of these challenging market conditions and the resulting increased opportunities in the sector."
By Emma Curzon, Alliance News reporter
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Vertu (VTU)