Marshall Motor Holdings Q&A: Outperformance across the group (LON:MMH)

Marshall Motor Holdings plc (LON:MMH) Chief Executive Officer Daksh Gupta and Chief Financial Officer Richard Blumberger caught up with DirectorsTalk to discuss another strong performance for the group, repaying government monies, the semi-conductor shortages, pipeline, re-election at the AGM and achieving another ranking in the Best UK Workplaces.

Q1: Daksh, another strong performance for Marshall Motor Holdings. Can you just take us through the year to date?

A1: We’re delighted with the release this morning so what we released was effectively a trading update in terms of the first four months of the year. Clearly, we were impacted as a result of the physical showrooms being closed as a result of the third lockdown from the 4th of January through to April 12th but despite those challenges, the team did a fantastic job in terms of performance.

So, just to give you a sort of sense of the operational performance. At the end of April, the market was up 8.4%, clearly up on the back of the fact that last year’s comparisons were a bit softer because the businesses were closed in the last week of March and April as a result of the lockdown then. Whilst the market was up 8.4% in new retail, we were up 19.5% on a like-for-like basis, that’s double digit and we also performed extremely well on used cars so our like-for-like performance to the end of April was up 42%. Again, if you give it a more fairer comparison so as a market data because of the distortion with operations being closed last year, the SMNT reported that at the end of Q1, the market was down 8.9%, we were down just 1.7%. So, another outperformance of 7.2% so absolutely delighted with that.

I think one of the things from our perspective is we were able to then take some actions to support the government, which we’ll talk about I’m sure in a moment, in terms of repaying grants and furlough.

I think the other thing we were able to do is upgrade our numbers by 23% and we’ve indicated that we’re expecting to have an outturn for this year of not less than the 2019 result, which of course was unaffected by the pandemic and that figure is £22.1 million.

Q2: You mentioned the government monies, what were the reasons, Richard, for repaying that back because as I understand you’re under no obligation and many don’t?

A2: We were under no obligation or expectation that we would repay furlough or any of the grants that we’ve received. What I would say is, we reflected as a Board and we looked at our strong trading position and our strong cash position in 2021 and we asked ourselves the question. The last year has been very difficult for us as a company and for many people affected by the pandemic, we are extremely grateful for the support given to us by the government in what was a huge uncertain time, especially for our people. Given the market tailwinds from which both the group and the sector as a whole has benefited, along with the strong out-performance that we achieved, we believe repayments to be the appropriate and responsible action to take.

We have a great culture and we pride ourselves in doing the right thing and we just felt this was the right thing for us to do.

Q3: Daksh, just going back to something that you said earlier, you said that no less than 2019, but how concerned are you with the well-documented semi-conductor shortage?

A3: As I said earlier, we’ve upgraded our numbers to a figure of not less than £22.1 which is, as I said, in line with 2019.

I think clearly there is a lot of media coverage in terms of this particular issue, I think it’s quite difficult to quantify the impact because clearly, we have 22 brands across the group and I think it’s hard to make an assumption in terms of what the exact impact will be. It won’t just be new that will be affected, it’ll be used because of course, many of our used cars are sourced by the sale of new cars, particularly with things like PCP renewal, fleet supply, motability supply demonstrated sales and so on.

I think the guidance that we’ve given today is effectively a floor for 2019, £22.1 million, and we have made some assumptions within that number so we feel pretty confident that we’ll deliver not less than the 2019 number.

Q4: Richard, the company has been one of the leading consolidators now for many years. You haven’t announced any acquisitions this year, but how is the pipeline looking?

A4: As you quite rightly say, the group has been one of the leading consolidators in recent times and indeed, over the last 13 years we’ve bought and sold 167 businesses and as a result of this, and our continued outperformance, we get frequent approaches with opportunities.

Our pipeline is strong, but it’s just worth remembering that we only do acquisitions where it makes strategic and financial sense for our shareholders and the businesses as a whole. What I’d also add is we’re seeing an increased amount of activity around consolidation and we expect to continue this path.

Q5: Daksh, I noticed that you were up for re-election today at the AGM, how did that go?

A5: Yes so, I was up for re-election today and I’m delighted with the support of our shareholders, we had a very high turnout so 82% of our shareholders voted and I’m delighted to say that the vote for my re-election was actually 100%. So, I’m clearly very proud of that and delighted for the support and very grateful for the trust that the shareholders put in, not only myself, but Richard and the management team.

What I will also say is delighted with the resolutions, in fact the overwhelming support we have for all of our resolutions so  for me, I think that is a huge testament to the competence of the shareholders have in the management team, but also a testament to the good governance that we have here within the group.

Q6: I also noticed that Marshall Motor Holdings achieved another ranking in the Best UK Workplaces, you must be really proud?

A6: Yes, we’re really proud of that. I think, particularly when you look at the impact that the business had last year and what our people had to go through, a challenging year for course, every company, but our team has performed amazingly as we talked about in today’s release.

I think for me, one of the key differentiators with our businesses, we’ve got a fantastic culture here, got great values, and I think we’ve demonstrated that again today with the repayment of the Coronavirus Job Retention Scheme grant and the retail grants as well. So, that £4 million, as Richard said, we didn’t need to pay but again, I think it demonstrates the values that we have as an organisation. All of this is ultimately underpinned by the fact we’ve got amazing people and amazing culture and I think that’s reflected in our engagement scores.

So, we’ve achieved a Great Place to Work status now for 11 years in a row, but more notably, as you touched on, we’ve been ranked in the Best UK Workplaces for 7 years in a row. In fact, we are also the number one automotive company in their rankings and also the number one retailer across all sectors.

So, from a personal perspective, it’s a great opportunity for me to also recognise our amazing people for the hard work that they put in this year.

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