Cambria trading in line, although outlook uncertain

Cambria Automobiles confirmed in a trading update on Tuesday that its trading for the 11 months to 31 July was in line with expectations.

The AIM-traded company said it maintained its momentum from the “strong results” delivered in the last financial year, and its trading performance in the first 11 months of the current financial year had been ahead of the corresponding period in 2015-16, both on a total and like-for-like basis.

“As flagged in our interim results statement on 9 May, the board remains cautious on the consumer outlook and the trading environment in the period post March has been more challenging, particularly in the new car arena which has been impacted by a number of factors,” the board said in its statement.

“The weakening in the sterling exchange rate has led to inflation in the landed cost of imported vehicles into the UK which, combined with a level of consumer uncertainty in the market, has led to the anticipated reduction of new car sales.”

The group reported a strong first half profit performance to the end of February, and that reportedly continued in the key plate change month of March.

However, performance in the period between April and July had been weaker than the prior year as a result of those market conditions.

“Used vehicle sales continued to perform well and whilst unit sales were 5.5% down following the closure of Swindon Motor Park - like-for-like down 1.7% - the marginal reduction in units has been more than offset by improved profit retention with gross profit per unit on both a total and like-for-like basis continuing to increase.

“This performance has again enhanced the profit from the used car segment of the business year on year.”

The Group's after sales operations increased revenue by 8.4% - like-for-like up 1.7% - with profitability up by 2.2% year on year - like-for-like down 1.3%.

That performance was apparently impacted by a fire at the Welwyn Garden City Jaguar and Aston Martin workshop in October.

Cambria said the work to rebuild the workshop was completed in June and it had since resumed normal operation.

The business interruption insurance claim had been submitted, and would be included in the full-year results which would bring the after sales like-for-like profit back in line with the prior year.

“Whilst new vehicle unit sales for the 11 months were down 12.2% - like-for-like down 17.6% - the gross profit per retail unit improved over the same period in the group's like-for-like businesses and therefore the gross profit in this department improved.

“The reduction in volume was partly attributed to the reduction in unit sales from the Barnet Jaguar Land Rover site during the disruption caused by the new building project, and partly attributable to reductions in unit sales from certain volume manufacturer partners.

“The achievement of annual new car volume related bonuses for the 2016 calendar year and Q1 2017 has had a positive impact on the profit per unit and has therefore offset any reduction in the overall gross profit reported in the period.”

Heading into the “important” September trading period, the new car order book was building in line with Cambria’s expectations in the current market conditions, the board said.

“The group has made significant progress with its property developments and site refurbishments during the period.

“We are pleased with the Barnet Jaguar Land Rover state-of-the-art facility which we have fully redeveloped and which we relaunched in July.

“The Group has also managed the closure of its Swindon Motor Park operation to facilitate the Jaguar Land Rover Arch concept development which is now under construction on the site.”

In order to facilitate the development of the Jaguar Land Rover and Aston Martin site in Hatfield to replace the current Welwyn Garden City facilities for the three brands, the group said it secured a 4.3 acre development site in the Hatfield Business Park and was in the process of obtaining the detailed planning consent so the facilities could be constructed during the 2018 calendar year.

Cambria said it would announce its preliminary results for the year to 31 August on 22 November.

“The Group has delivered a solid performance in the 11 months to 31 July 2017 and I am particularly pleased with the increases in profit per unit in both new and used vehicles,” commented chief executive Mark Lavery.

“We have had a busy year having completed the substantial building project at our Barnet Jaguar Land Rover site and have recently begun construction of our new Jaguar Land Rover Arch concept site in Swindon.”

Lavery said the board continued to believe that there would be pressure on new car volumes and margins in 2017 and 2018 with the current macroeconomic uncertainty.

“However, the group's trading performance in the first 11 months indicates that trading is in line with market expectations for the full year.”