Cambria Automobiles profit before tax up 55.5%

Cambria Automobiles

Cambria Automobiles plc (LON:CAMB), the franchised motor retailer, has today announced its unaudited interim results for the six months ended 28 February 2021. The Group has performed ahead of the prior year despite operating through the various COVID related Lockdown and Tiering restrictions imposed by the UK Government.  

During the period, all of the Group’s showrooms were closed for 82 days due to Lockdown restrictions, with the majority closed for a further 16 days as they operated in Tier 4 restricted regions.  All Group showrooms were able to re-open on 12 April in line with Government guidance.  Pleasingly, the Group was able to operate a digital click and collect service in the sales operation and aftersales departments remained open throughout the Lockdown and Tier 4 restrictions.  During the period, the Group utilised the Government’s Coronavirus Job Retention Scheme (CJRS) and the Business Rates reliefs to support its staff and trading operations given the enforced retail site closures.

Current Trading and Outlook  

As flagged in the Group’s pre-close trading update, the new car order bank entering March was behind the previous year, however despite being in Lockdown throughout this key plate change month, the Group delivered a similar number of new cars year on year.  The used car operation performed well. Following the re-opening of the Group’s showrooms on 12 April, trading has begun positively however it remains too early to draw any firm conclusions about the trading outlook at this stage.  

Aside from other industry headwinds which have been flagged previously, there is now a global semiconductor shortage that is impacting the production of cars and vans with temporary factory closures at a number of the vehicle manufacturers.  These closures are having an impact on vehicle supply into both the retail and fleet new car and van markets which in turn has had an impact on the liquidity of supply into the used car market. 

We continue to withhold guidance until we have more certainty over new vehicle supply, the economic environment as we come out of Lockdown 3 and the impact of the ending of the CJRS and vaccine roll-out on consumer demand.

Financial highlights:

·    Revenue reduced by 16.0% to £254.7m (H1 2020: £303.1m)

·    Underlying profit before tax up 55.5% at £9.8m (H1 2020: £6.3m)

·    Underlying earnings per share increased 52.4% to 7.79p (H1 2020: 5.11p)

·    Underlying net profit margin of 3.83% (H1 2020: 2.07%)

·    Balance sheet with net assets of £79.5m (H1 2020: £68.5m)

·    Net debt position as at 28 February 2021 of £5.6m (H1 2020: £6.0m)

·    Rolling twelve month return on equity* of 15.82% (H1 2020: 15.85%)

·    As previously signalled, interim dividend suspended in light of COVID 19 impact (H1 2020: Nil)

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Operational highlights:

·    Units of new vehicle sales reduced by 16.6%, as anticipated, with an 8.8% reduction in average profit per unit

·    Units of used vehicle sales down 30.8%; partially offset by a 18.2% improvement in average profit per unit

·    Aftersales revenue decreased by 12.7% but with improvement in gross profit

·    The cost reduction measures taken during the last financial year have enabled the Group to be leaner and more agile despite the impact on volumes as a result of COVID

·    Set up SOGO Mobility Limited as a provider of flexible leasing solutions for corporates and individuals

* underlying profit after tax as a proportion of Average Shareholder’s funds

Mark Lavery, Chief Executive of Cambria Automobiles, said:

“Whilst I am pleased with the overall performance of the Group in the first half of our financial year,  the imposition of various Lockdown restrictions has clearly had a material impact on the volume of cars that we have been able to sell to our Guests.  There is no doubt that most retail operations learnt vital lessons during Lockdown 1 to adapt to different trading models and our business was no different, seamlessly migrating towards a digital click and collect offering for vehicle sales whilst operating the aftersales departments as efficiently as possible.

We took significant actions to reduce our cost base in the previous financial year and were always concerned that there would be a third Lockdown based on the national data in the autumn of 2020.  The reduced volumes have translated into reduced gross profits in the new and used car departments but our aftersales operations have performed well, being more efficient and therefore more profitable.

Aside from COVID, the industry continues to face headwinds in relation to the significant changes in technology and more recently in relation to new car product supply due to the global shortage of microchips and semi-conductors, which could continue for some time and may have a material impact on the new car market.

I am very proud of the response of our entire Associate base and thank them for all the support and flexibility that they have shown. I would also like to thank our Brand partners for their pragmatism and ongoing support throughout the pandemic.  The trading performance that has been produced in the face of the challenges outlined is good.  Our resilient business model, outstanding Guest experience and brand partnerships continue to help us navigate the current environment and our enhanced franchised portfolio stands us in good stead to benefit from the opportunities that will present themselves as we emerge from the pandemic.”  

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