Motorpoint takes hefty profit hit due to low consumer confidence
Profit at Motorpoint, the UK’s largest independent vehicle retailer, fell nearly 20 per cent this morning as the company struggled with lower consumer confidence.
Shares in Motorpoint were up 2.3 per cent this morning.
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The figures
Profit at the car seller fell 18 per cent in the first half of 2019 to £9.4m, down from £11.5m for the same period last year.
However, the company saw a marginal increase in revenue of one per cent, from £528.6m to £533.9m this year.
The group’s cash flow from operations grew to £25.9m, a conversion rate of 233 per cent, due to an improvement in stock days in the period.
Earnings per share also fell 14 per cent to 8p, although the company did raise its dividend by four per cent to 2.6p.
Motorpoint said that although trading was currently consistent with full year expectations, the ongoing Brexit negotiations could influence its performance in “unpredictable ways.”
Why it’s interesting
Despite a challenging period for sales due to a lack of consumer confidence, the Derby-headquartered company said that it had made progress in improving its processes.
During the period the firm opened a 10-acre preparation centre in Peterborough, and said that a new site in Swansea would likely be launched by the end of this financial year.
Motorpoint has also made changes to its senior management team, having appointed a new chief operating officer and chief technical officer to improve the firm’s IT systems.
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Group founder and non-executive director David Shelton will retire from the board at the end of the year.
What Motorpoint said
Motorpoint’s chief executive Mark Carpenter said:
“Against a challenging environment, the Group has delivered a resilient trading performance, underpinned by revenue growth and robust cash generation.
“Group profit was impacted by increased overheads, which were approximately £2m higher than the comparable period last year. Half of this increase will be non-recurring following process changes implemented in the period.
“The first half of the year has seen significant growth in our market share despite ongoing market disruption, with the political situation leading to another period of lacklustre consumer confidence. Specifically, within the used car market, the early summer months was also a period of unusually high pressure on margins.”