Motor retailer Vertu has increased profit expectations for the year on the back of the firm’s strong trading to date - but warned that the supply of new cars is becoming a concern.
The Gateshead company – the fifth largest automotive retailer in the 海角视频 with a network of 149 sales outlets – holds its AGM today, where it will detail how it is seeing a continuation of the strong trading trends witnessed in March and April.
The firm, whose dealerships operate predominantly under the Bristol Street Motors, Vertu, Farnell and Macklin Motors brand names, says that if these trends continue, a strong first half financial performance is anticipated.
It warned, however, that there remain risks of potential Covid-19 disruption and vehicle supply constraints for the remainder of the financial year.
A number of major automotive manufacturers have had to suspend some production in recent weeks due to a shortage of semiconductor chips.
Many car firms cancelled orders of chips at the start of the pandemic when production was halted, only to see makers of games consoles - which were seeing increasing sales during lockdowns - take their place in supply chains.
Manufacturers have also suffered from global shipping delays as demand increases and some have reported Brexit-related problems as companies get to grips with new paperwork and rules.
In a stock market announcement Vertu said: “A tightening of new vehicle supply, largely reflecting component shortages flagged in the year end announcement, is increasingly apparent.
Most Read
“The expected time between order and delivery of new vehicles to customers for certain of the group’s franchises is now seeing elongation.
“The used car market remains very robust from a demand perspective. The reduction in new car supply is contributing to a reduced supply of used vehicles, with a resultant exceptional wholesale pricing environment.
“In light of the strong trading performance to date, driven largely by the exceptional used car market environment, the board now anticipates that the group’s full year adjusted profit before tax will be above current expectations and in the range of £28m - £32m.”
The board added that said it remains confident in the prospects for the group, saying it believes it is strategically very well placed to capitalise on the changes and opportunities in the 海角视频 motor retail sector.
Shares in Vertu - which cut 350 jobs during the pandemic - lifted 3% in early trading as investors focused on the profit cheer.
It comes after the group recently revealed that underlying profits lifted to £24.6m for the year to February 28, up from £23m the previous year, despite revenues being hit by lockdowns.