Marshall Motor Holdings to report higher profits despite 'challenging' conditions
Marshall Motor Holdings guided towards the upper end of its previous range of expectations for the full-year, despite "challenging" market conditions, with underlying profits for the six months to 30 June now seen slightly ahead of last year's.
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Nevertheless, management said it remained cautious on the outlook for the back half of 2018 due to multiple factors, including continued economic uncertainty and consumer confusion around diesel product.
Daksh Gupta, chief executive of Marshall, said: "We remain cautious but given our performance to date, our expected outlook for the full year is improved. With the support of our brand partners, excellent portfolio, robust operating disciplines and strong balance sheet, I am confident the Group remains very well positioned for the future."
The new car market had been especially weak over the first five months of the year, weighing on its margins in that segment, although on a like-for-like basis the company said it had performed better than its peers.
According to Marshall, new car registrations in the UK shrank by 6.8% over the five months ending in May.
Nevertheless, Marshall was able to more than offset the difficulties through strong improvements in the profitability of used vehicles and by clamping down on unnecessary costs in the business.
Included in the latter were a reduction in its inventories of used cars and related costs, the closure of six loss-making sites and lower-than-anticipated historic pension liabilities linked to the sale of its Marshall Leasing unit.
After the disposal of a surplus freehold property for £1m, belonging to one of those six sites, the company reported a property portfolio worth approximately £120m, in line with its internal expectations, and said it expected to report a small amount of debt as at 30 June.
The company said it will release its half-year results for the period on 14 August.
Marshall Motor Holdings also confirmed that Mark Raban had notified the board of his intention to step down from his role as chief financial officer.
Raban joined the company in 2014 and played an "integral" role in both Marshall's initial public offering and the period of growth that followed, during which the company’s revenue and profit before tax doubled.
The outgoing finance director was to remain in his role until a suitable replacement had been found and appointed.
Commenting on the company's results, Peel Hunt analyst John Stevenson said: "our sense is that there is no cliff edge moment coming for the car dealers – new car sales trends as improving [...] Opportunity for further acquisitions are back on the agenda. September remains the next key trading period. Trading on 8x PER, we continue to believe the shares are fundamentally undervalued."
As of 1409 BST, Marshall Motor Holdings' shares were up 0.60% at 167.50p.