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Motorpoint sees profits stall after lockdown shuts showrooms

Tue 14 July 2020 11:00 | A A A

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(Sharecast News) - Motorpoint Group reported a sharp drop in profits on Tuesday, after the Covid-19 pandemic disrupted trading during what is traditionally one of the busiest times of the year for the vehicle retailer.

Revenues for the year to 31 March fell 3.8% to £1.02bn, while pre-tax profits were down 15.3% at £18.8m. Basic earnings per share were 16.4p, compared to 18.1p a year previously. Cost of sales eased slightly, to £978.8m from £939.1m in 2019.

The independent retailer, which specialises in nearly-new cars, said profits had been "substantially impacted" by Covid-19 in March. The month is normally the group's busiest trading period but Motorpoint ended the year with all 13 showrooms closed until further notice following the introduction of lockdown measures.

Mark Carpenter, chief executive, said: "Inevitably, the need to temporarily close our sites across the UK resulted in our full-year trading performance being impacted, despite trading positively in the months prior to lockdown. However, we made great strategic and operational progress during the year."

Looking ahead to the current year, Carpenter said that since sites had reopened in June, trading volumes had been better than expected, and higher than the equivalent period last year, "with margins at least in line with seasonal norms".

But he conceded: "Despite this encouraging performance, we remain cautious about drawing any conclusions for our full-year prospects given our sites have only been open for a short period of time and significant uncertainty in relation to the impact from Covid-19 remains."

Darren Shirley, analyst at Shore Capital, noted that current trading was strong, with robust margins and cash levels "significantly" ahead. "However, it remains too early in the unlocking process to understand if recent weeks reflect pent-up demand or a return to more normal trading activity. As such, we leave our forecasts withdrawn and look to reinstate in early October in-line with a first half trading update."

As at 1045 BST, shares in Motorpoint were ahead 7% at 241.6p.

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