Vertu Motors (VTU) H2 2025 earnings summary

Executive summary

• Maintained strong strategic position as the only major quoted UK franchise retailer, with over £4.8bn turnover and 5% UK car market share, despite sector headwinds and profit decline due to government ZEV mandate.

• Operational performance was robust: market share gains in new retail cars, profit growth in used and after-sales, and successful cost reduction and share buyback initiatives.

• Transitioned to a single Vertu brand, expected to deliver £5m in medium-term savings and increased marketing effectiveness; all 198 sales outlets now under one brand.

• Adjusted profit before tax fell to £29.3m from £34.8m, impacted by ZEV mandate effects on new retail volumes and margins.

• Net debt rose to £66.6m, mainly due to the Burrows acquisition, but remained below market expectations.

Financial highlights

• Revenue increased to £4,763.9m (+1.7% YoY); gross profit: £532.9m (+3.3% YoY); core group revenue declined due to lower new retail vehicle volumes.

• Gross margin improved to 11.2% from a higher after-sales mix and improved used vehicle margins; adjusted operating profit and EPS declined due to new car channel weakness.

• Core gross profit rose £7m, led by after-sales and used cars, but offset by a £10.9m drop in new vehicle gross profit.

• Free cash inflow of £37.3m, aided by £7m working capital inflow; strong H2 cash performance.

• Final dividend of 1.15p/share, full year 2.05p/share, in line with dividend cover policy.

Outlook and guidance

• Full year expectations unchanged; strong start to FY26 with increased profitability year-on-year.

• Early FY trading ahead of cautious forecasts, with gross profit and trading profit up in March-April.

• Manufacturers are refocusing on the new retail channel, driving growth.

• ZEV mandate expected to continue causing volatility and uncertainty in the new car market; risks remain around discounting and residual values for BEVs.

• Acquisitions and startups expected to move to profitability; capital allocation and cost control remain priorities.