Motorpoint sees FY losses at 'favourable end' of expectations
By Michele Maatouk
Date: Thursday 04 Apr 2024
(Sharecast News) - Vehicle retailer Motorpoint said on Thursday that full-year pre-tax losses were set to be "at the favourable end" of management expectations following a strong performance in the fourth quarter.
Motorpoint said the positive momentum experienced at the start of the calendar year continued through February and March, with fourth-quarter retail volume up around 9% year-on-year. As a result, January, February and March were all profitable months.
Consumer demand has picked up, and the group benefitted from enhancements made to its digital presence during the past year which - among other things - which are generating strong website traffic.
Motorpoint said margins gradually improved through the fourth quarter as it increased stock turn and sold through stock affected by the abrupt third-quarter correction in used car values.
Chief executive Mark Carpenter said: "I am delighted that the difficult conditions experienced in 2023 have eased in Q4 and, combined with our focus on driving operational excellence through a programme we call Brilliant Basics, has meant that Q4 was characterised by consistent profitability.
"We are achieving growth, increasing stock turn and improving margins, and this is expected to continue into FY25 as supply improves following recent new car registration growth. I am therefore optimistic for FY25 and look forward to Motorpoint making the most of the growth opportunities ahead."
Russ Mould, investment director at AJ Bell, said: "Things are looking up for the used car sector after Motorpoint reported an improvement in trading in recent months. Consumers under financial pressure have been pulling back from making big ticket purchases. Some people need a vehicle to get from A to B no matter what's happening in the world, but many can view a car as a non-essential purchase. They keep their existing motor and hope it lasts longer until they're financially able to switch.
"Motorpoint sells nearly new cars so these can be meaningful purchases for households. This isn't like buying a TV or new clothes - it involves shelling out a substantial amount of hard-earned cash so the customer needs to be sure they can afford it.
"The backdrop should improve further for Motorpoint once the Bank of England starts to reduce interest rates. That action could make households feel as if the worst is over and that they are able to get their finances back on track. It also helps that wage growth has been fairly decent, on average."
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