Marshall Motor Holdings Plc (LON:MMH), one of the UK’s leading automotive retail groups, has issued the following trading statement covering the 4 month period ending 30 April 2021 ahead of its Annual General Meeting to be held at 10:00am today.
Key Highlights:
· Continued strong market outperformance in the Period.
· Commitment to repay all Coronavirus Job Retention Scheme (“CJRS”) grants received for 2021 (£2.6m)
· Commitment to repay all non-essential retail sector grants received in 2021 (£1.4m).
· Targeting 2021 underlying profit before tax of not less than 2019’s result of £22.1m (a year unaffected by the pandemic), after repayment of CJRS and non-essential retail sector grants.
· Strong cash generation in the Period.
Daksh Gupta, Chief Executive Officer, said:
“Trading during the first fourth months of the year was clearly impacted by the closure of our physical showrooms during the third national lockdown. Despite this, we continued to operate effectively on a ‘click and collect’ basis as a result of our investment and focus on our online retailing strategy. We are pleased to have continued to significantly outperform both the new retail and used car markets and to deliver a strong financial result for the Period.
Our trading performance, strong financial position and commitment to our corporate responsibilities has led to our decision to repay all CJRS and non-essential retail sector grants received in this financial year. Given the market tailwinds from which both the Group and the sector as whole has benefitted, we believe repayment to be the appropriate and responsible action to take. We remain extremely grateful for the support provided by the Government to the retail sector throughout the ongoing pandemic and we are very proud that we are able to repay this support.
There are a range of possible outcomes for this financial year given the potential ongoing impact of COVID-19 and well-documented global semi-conductor supply shortages. However, the business is currently targeting an underlying profit before tax for 2021 of not less than 2019’s result of £22.1m, having fully repaid all CJRS and non-essential retail sector grants received in this financial year.
On behalf of the Board, I would like to thank all our colleagues for their dedication and commitment in what has been a very challenging period.”
Current Trading
As anticipated at the time of publication of our 2020 annual results on 9 March 2021, trading in the first four months of the financial year to 30 April 2021 was dominated by the impact of COVID-19 and the requirement to close our physical retail businesses from 5 January 2021 until 12 April 2021.
Despite the challenges presented by this significant interruption to normal business operations, the development and investment made in 2020 to ensure we could operate effectively on a ‘click and collect’ basis, in part, mitigated the impact of the closure of our physical showrooms to customers.
This investment and focus enabled the Group to continue to trade strongly during the Period, significantly outperforming both the new retail and used car markets, together with a strong aftersales performance. Margins benefited from positive consumer demand for remote vehicle sales and continued sector tailwinds including robust used vehicle values and favourable demand-to-supply conditions for both new and used vehicles.
| 4 months to 30 April 2021 v 4 months to 30 April 2020 | SMMT registrations | MMH LFL | Variance to SMMT | MMH Total |
| New Retail Units | 8.4% | 19.5% | 11.1% | 18.2% |
| New Fleet Units | 23.2% | 21.8% | (1.3%) | 20.4% |
| Total New Units | 16.2% | 20.4% | 4.1% | 19.0% |
| Used Units | – | 42.0% | – | 40.5% |
| Aftersales Revenue | – | 22.1% | – | 19.0% |
| Total Revenue | – | 33.3% | – | 32.3% |
| Latest Used Car Market Data(3 months to 31 March 2021 v 3 months to 31 March 2020) | SMMT registrations | MMH LFL | Variance to SMMT | MMH Total |
| Used Units | (8.9%) | (1.7%) | 7.2% | (2.8%) |
Financial Position
The Group’s financial position remains strong, improving further following positive trading and strong cash generation during the Period.
As a result, whilst the closure of its physical showrooms for the majority of the Period required the Group to furlough a significant number of colleagues, in particular during January and February, the Board has committed to repay all CJRS and non-essential retail sector grants received in this financial year. The expected repayments are approximately £4.0m.
Strategic Growth
The Group has a longstanding track record of being one of the sector’s leading consolidators and its strong balance sheet means it remains well positioned to take advantage of further growth opportunities as they arise. The Group continues to review a pipeline of potential acquisition opportunities to deliver accretive shareholder value growth. However, the Group will only pursue acquisitive growth where it makes strategic and financial sense for its shareholders and in conjunction with its brand partners.
Colleagues
In April, the Group was proud to have once again been ranked in the UK’s Best WorkplacesTM league tables by the Great Place to Work Institute for the seventh year in succession. The Group has achieved Great Place to Work status for 11 years in a row and was the highest ranking retailer across all sectors and company size categories. The Board remains extremely grateful for our colleagues’ dedication and commitment in what has been a very challenging period.
Interim Results and Dividends
The Group will announce its interim results for the six months ending 30 June 2021 on 10 August 2021.
The Board understands the importance of dividends to shareholders and it intends to resume the payment of dividends as soon as possible. It will consider the position next at the time of the release of its interim results in August 2021.
Outlook
The Board has been encouraged by the Group’s performance during the Period, despite the significant impact of the prolonged period of closure of our physical retail businesses. We are particularly pleased to once again report the Group’s continued and significant outperformance of the wider new retail and used car markets during the Period.
The Board is, however, mindful of possible further impacts of COVID-19 over the coming months as well as potentially significant supply challenges for bot and used vehicles as a result of well-documented global semi-conductor supply shortages.
Given these uncertainties, there are a range of possible outcomes for financial year ending 31 December 2021. However, the business is currently targeting an underlying profit before tax for 2021 of not less than 2019’s result of £22.1m (a year unaffected by the pandemic), having fully repaid all CJRS and non-essential retail sector grants received in this financial year.
