Marshall Motor first-half profit rises despite dip in revenue

In the six months to 30 June, underlying pre-tax profit ticked up 1.2% to a record £16.4m even as revenue dipped 0.4% to £1.16bn, as the automotive retailer saw a "significant" improvement in used vehicle unit profitability thanks to robust operating controls.

Like-for-like sales of new cars to retail customers were down 5.9%, while LFL sales of used cars were 0.3% lower and LFL aftersales revenue was up 3.2%.

New car gross margin in the first half was 7%, down 40 basis points on the same period a year ago, but used vehicle margin was 37 basis points higher at 7.2% and the aftersales margin came in at 46.1%, which was 37 basis points below the first half of last year.

Marshall said it benefited from the closure of five franchised dealerships and one used car centre in November 2017.

Chief executive officer Daksh Gupta said: "The board is pleased to announce further profit growth in our continuing retail business in the period against an ongoing background of a challenging UK new car market. This has been achieved by a combination of robust operating disciplines, strong management actions on cost control and the benefit of site closures in 2017.

"With our excellent portfolio, robust operating disciplines, strong balance sheet and the support of our brand partners, I am confident the group remains very well positioned for the future. The board's current outlook for the full year remains unchanged."

From 1 September, all new vehicles sold in the UK are required to have been tested and certified under the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP). This replaces the outgoing New European Driving Cycle test introduced in the 1980s.

Marshall said this is a "significant" change for automotive manufacturers and is expected to have an impact on the new car retail market over the remainder of the year and possibly into 2019.

"The extent of this impact is not yet known and it will vary by manufacturer and by vehicle model. Industry forecasts suggest there is likely to be some impact on vehicle supply and longer lead times for some models and brands of new vehicles. In addition, because implementation of the new regime coincides with the key September plate-change, it is anticipated that the spread of vehicle registrations and sales throughout Q3 and Q4 2018 will deviate from historical norms," the company said.

At 0930 BST, the shares were down 1.9% to 154p.