Motorpoint Regulatory News (MOTR)

5 October 2023

Motorpoint Group PLC

("Motorpoint" or the "Group")

 

Half Year Trading Update

 

Stronger quarter-on-quarter performance resulting from cost reductions and operational improvements

 

Motorpoint Group PLC, the UK's leading independent omnichannel vehicle retailer, provides an update on its trading performance for the six months ended 30 September 2023 ("H1 FY24").

 

In our trading update on 26 July 2023, we reiterated that the UK's difficult macroeconomic conditions continued to hamper our growth and profitability. As a result, in Q1, we took swift, decisive action to right-size the business to reflect the reduced market size and ensure cash generative trading at lower levels of group sales.  Some of our actions included increasing retail margins supported by the use of data to optimise selling prices, reducing auction fees by securing a greater proportion of stock through direct supply channels, streamlining our organisational structure, pausing new store roll out and reducing discretionary capital spend. Our right-sizing programme proved helpful to our performance in Q2 as these difficult macro conditions continued.

 

As we have previously communicated, the affordability of used vehicles has been adversely affected by high prices and increasing APR finance rates, against the backdrop of continued consumer uncertainty. In response, we have recently taken further action by broadening our selling criteria to include vehicles up to five years old and 50,000 miles, to help our customers find the right vehicle in accordance with more constrained household budgets. We anticipate used values will gradually align to historic levels as new car supply continues to improve which will further enhance affordability for our customers.

 

As a consequence of the margin improvement and cost base actions we highlighted in July 2023, the underlying loss before taxation of £3.1m incurred in Q1 narrowed to a small loss of c.£0.6m in Q2. For the half year, the business made an underlying operating profit of c.£1.6m before interest expense of £5.3m. We also incurred a one-off exceptional charge of c.£1.0m which related to redundancy costs. 

 

Despite the current market challenges, we remain committed to our long term growth aspirations, while focusing in the short term on margin improvement, cost base management, and cash generation. The Group generated net cash from operations in H1 FY24 and ended the period with net cash of £11.0m (30 June 2023: £2.2m) with further facility headroom of £35m available, demonstrating the resilience of the business in difficult markets.

 

The strong cash position of the Group allowed us to continue making targeted strategic investment, with further improvements in technology involving both our retail and wholesale businesses, and we opened our 20th store, in Ipswich, in May 2023. Our market share of the 0-4 year old market increased to 3.4% for the 12 months to June 2023 (previous 12 months 3.2%).

 

The Group expects to announce its Interim Results on 23 November 2023.

 

Mark Carpenter, CEO of Motorpoint, said:

"The impacts of high inflation, interest rates, and consumer uncertainty continue to affect demand for used cars. We have responded by reducing our cost base and expanding our retail criteria to help customers find the car of their choice at a price they can afford. We have successfully preserved cash while making progress on selective strategic initiatives, and are well positioned to emerge from this difficult macroeconomic cycle a leaner and more agile business, ready to seize the significant opportunity as market conditions improve."

 

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Notes to editors

Motorpoint is the UK's leading independent E-commerce led omnichannel vehicle retailer, focused on giving retail and trade customers the easiest, most affordable and seamless way of buying, selling and financing their car whether online, in store or a combination of both. Through its leading B2C platform Motorpoint.co.uk and UK network of 20 sales and collection stores, the Group provides an unrivalled offering in the nearly new car market, where consumers can effortlessly browse, buy or finance their next car and collect or have it delivered directly to their homes. Motorpoint's purely online wholesale platform Auction4Cars.com sells vehicles into the wholesale B2B market that have been part exchanged by retail customers, or purchased directly from them by the Group as part of its online car buying service. Motorpoint's diversified business model, underpinned by its established brand, industry leading technology and sophisticated marketing infrastructure, always delivers the best choice, value, service and quality for customers. The Group is proud to have been recognised for nine consecutive years as one of the Top 100 Best Companies to Work For.