Marshall set to steer past car market chaos and top targets
Despite chaos in the UK car market, Marshall Motor Holdings in Cambridge looks set to defy the odds and beat its forecast targets for the full year following an excellent first-half.
The quoted company posted a bullish pre-close trading statement ahead of the release in August of its results for the six months to June 30.
Despite a challenging UK new vehicle market during H1, the group has delivered a positive performance. Underlying profit before tax from continuing operations is expected to be marginally ahead of the record performance reported in the corresponding period last year.
CEO Daksh Gupta said this had been driven by robust trading disciplines, tight control of discretionary costs and the positive impact of the previously announced closure of six loss making sites.
He said: “The group has delivered a positive performance to date against an ongoing background of a challenging UK new car market.
“We remain cautious but given our performance to date, our expected outlook for the full year is improved. With the support of our brand partners, excellent portfolio, robust operating disciplines and strong balance sheet, I am confident the group remains very well positioned for the future.”
As widely expected, during the first five months of 2018 the UK new car market declined further. Including the impact of dealer self registration activity, total registrations of new vehicles in that period declined by 6.8 per cent. New vehicle registrations to retail and fleet customers fell 5.7 per cent and 7.8 per cent, respectively.
Over the same period, the group's like-for-like sales of new retail units were in line with the new car retail market, although there remained ongoing margin pressure.
As reported in 2017, the group made the commercial decision to withdraw from certain low margin fleet business. This is reflected in the group's relative performance versus the new car fleet market. Excluding this, the group's overall new car unit sales performance in the first five months of 2018 was ahead of market.
The company’s like-for-like sales of used units during H1 were consistent with the corresponding period last year. Robust operating controls, underpinned by a disciplined used car stocking policy, enabled MMH to deliver a strong improvement in used vehicle profitability and reduce inventory holding and associated costs during the period.
Given the challenging UK new car market, MMH has continued to focus on all aspects of discretionary cost control. This has enabled the group, on a like-for-like basis, to partly offset fixed, structural and general inflationary cost increases.
Gupta said the group's balance sheet was strong, underpinned by a freehold/long leasehold property portfolio of c£120 million.
He added: “The group has delivered a positive performance in the year to date. In the light of continued economic uncertainty, ongoing consumer confusion around diesel product and possible new vehicle supply constraints in the lead up to the implementation of the Worldwide Harmonised Light Vehicle Testing Procedures on September 1, the board believes it is right to remain cautious regarding the second half.
“Nevertheless, given the positive performance in H1, the board's current outlook for the full year is now expected to be at the upper end of its expectations.”
• PHOTOGRAPH SHOWS: Daksh Gupta