Marshall Motor Holdings PLC Q&A: Latest trading update (LON:MMH)

Marshall Motor Holdings Plc

Marshall Motor Holdings PLC (LON:MMH) Chief Executive Officer Daksh Gupta caught up with DirectorsTalk for an exclusive interview to discuss their latest trading update.


Q1: I can see that you provided the market with an update earlier, why have you decided to release this statement now?

A1: Well, we wouldn’t normally release a trading statement at this point in the cycle. However, following the decline in the September market for new cars, the board felt it was appropriate to provide a response to reassure investors that our previous outlook for the year remain unchanged.

At the time of our interim announcement, we did remain cautious on the second half of the year and we did anticipate significant distortions in the new vehicle market as a result of WLTP and expected supply issues throughout Q4 and also possibly into 2019.

Marshall Motor Holdings has mitigated the effects of this challenging new vehicle market by strong operational disciplines and the benefits of decisive action that we took in 2017 to proactively manage costs and the dealership portfolio. As a result, our robust performance is continuing as expected and I reiterate that our outlook for the full year remains unchanged from our previous expectations.


Q2: What has the impact of WLTP been?

A2: Just as a reminder, WLTP which is short for the new Worldwide Harmonized Light Vehicles Testing Procedure is a new vehicle emissions testing regime. These changes came into effect from the 1st of September with the objective of deriving real-world emissions and fuel economy figures.

The result of this is the August new vehicle market, although one of the smallest of the year, was up 23.1% due to registering of stock tested under the previous regime. Due to the volume of vehicles requiring testing under the new procedure, a number of brands have seen supply shortages during the key September plate change month, leading to a market decline of 20.5%. These shortages are likely to continue throughout Q4.

Nevertheless, we expect this to be a temporary effect and supply normalised by the end of Q1 2019. It is important to reiterate that we did anticipated these shortages and we did communicate this at our interims and we’ve built them into our full year expectations.


Q3: You talked about Marshall Motor Holdings’ strong balance sheet and future investment opportunities, could you give some more details on this?

A3: At the half year, the group had over £200 million of net assets and £121 million of freehold property which equates to £2.58 and £1.56 per share respectively, we’re also debt free and we continue to invest in our brand partners.

As reported in the RNS, we are scheduled to open our new Jaguar Land Rover facility on freehold land in Lincoln and a new Ford store on long-leasehold land in Cambridge in the new year.

We’re clearly operating in an environment where the market is consolidating and we’re seeing potential acquisition opportunities out there. From our perspective, we clearly only ever do this when it makes strategic sense for the group and also financial sense for our shareholders.

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