2019 Interim Results Presentation 13th August 2019 Daksh Gupta Chief Executive Officer Richard Blumberger Chief Financial Officer
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Agenda • H1 2019 key highlights and market overview – Daksh Gupta • Financial review – Richard Blumberger • Compliance overview – Richard Blumberger • Update on business initiatives, strategy and future outlook – Daksh Gupta • Summary – Daksh Gupta • Q&A 3 2
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Interim highlights and market overview Daksh Gupta Chief Executive Officer
Strong like-for-like outperformance against the market A D J U S T E D GROSS OPERATING N E T PBT ** REVENUE * L E V E R A G E C A S H / PROFIT % * PROFIT* ( D E B T ) * * * £1,160.6m +0.9% 11.4% -3bps £20.2m -4.1% £15.2m -5.3% £5.8m Nil FY 18: (£5.1m) 2018: £1,150.0m 2018: 11.4% 2018: £21.1m 2018: £16.0m 2018: Nil H1 18: £0.9m NEW RETAIL AFTERSALES DIVIDEND FLEET UNITS * USED UNITS * REVENUE * up 32.6% UNITS * -0.4% -1.1% +7.2% +1.8% Interim 2.85p vs market -3.2% **** vs market -3.6% **** 2018: 2.15p * Like-for-like (includes group businesses or activities that have been active or trading for a period of 12 consecutive months and excludes businesses or activities that do not have 12 months trading activity); ** Reported underlying; *** Non GAAP measure that excludes 6 6 4 IFRS 16-related lease liabilities; **** SMMT registrations which includes impact of dealer self-registration activity
H1 2019 key highlights • Revenue up 0.9% to £1,160.6m * Gross margin consistent at 11.4% * • • Reported underlying PBT of £15.2m • Net cash of £5.8m despite continued investment and balance sheet strengthening • Strong balance sheet with £200.7m of net assets, underpinned by £123.9m of freehold / long leasehold property • Acquisition of six ŠKODA retail centres to become UK’s largest retailer for the brand for £3.5m • £8.8m portfolio investment, including £1.7m freehold acquisition of Northampton ŠKODA • Ranked as one of the UK’s best workplaces for the 5th continuous year • Strong like-for-like outperformance against the market for new retail units, new fleet units and used units • Interim dividend 2.85p per share, up 32.6% aided by recently revised policy * Like-for-like 7 5 5
New car market update Newly opened Cambridge Ford Store 8
New car market remains challenging UK Market UK NEW CAR REGISTRATIONS (m) • 1.27m new cars registered in H1, down 3.4% • Retail down 3.2%, fleet / business down 3.6% • Ongoing consumer uncertainty around diesel vehicles 2.5 • Registrations by fuel type: • Diesel down 19.4% (27.2% share) – lowest since 2002 • Petrol up 3.5% (66.2% share) 2.0 • AFVs up 13.9% (6.6% share), pure EV up 60.3% (0.9% share) • WLTP continued to impact supply in certain brands 1.5 • July -4.1%, YTD -3.5% • Latest SMMT forecast for full year 2019 -2.2% to 2.3m • Implies Aug-Dec -0.1% 1.0 1 st September further emissions regulations being introduced • MMH 0.5 • Despite declining markets, MMH outperformed in both new retail and fleet units versus the market, an excellent result • Like-for-like new retail unit sales down 0.4% 0.0 • Like-for-like fleet unit sales down 1.1% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F • Strong like-for-like margin growth to 7.7%, +73bps • PCP remains popular with 81% of new car finance cases AFV Petrol Diesel (H1 18: 80%), 72,938 Live PCPs (H1 18: 66,540) Source: SMMT 9 6 6
Used car market update Honda e prototype 10
Used car market: Q2 residual value (‘RV’) pressure UK USED CAR MARKET (m) UK Market 9.0 • Q1 used car transactions down -0.6% to 2.0m • Q2 experienced residual value pressure 8.0 • 2019 full year forecast transactions down 2% to 7.8m 7.0 (still fourth highest on record) 6.0 MMH • Highest ever used unit sales performance 5.0 • Like-for-like used unit sales up 7.2% 4.0 • Like-for-like revenue up 6.8% 3.0 • Like-for-like margin down 62bps to 6.6% 2.0 • Continued 56 day stocking policy and use of data / technology remain key differentiators 1.0 • PCP penetration of used finance cases broadly 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019F stable at 59% (H1 18: 63%) Source: SMMT and Cox Automotive 11 7 7
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Q2 RV pressure expected to normalise in H2 CUMULATIVE CAP BLACK BOOK LIVE % MOVEMENTS 2015-19 • Used car market robust. Tailwinds driven by WLTP-related new car supply issues and associated move towards car allowances 2018 • Prices inflated, with petrol values particularly strong • Prices drop from beginning of year. No Q1 strength as in previous years • H1 2019 “Perfect storm” from April onwards: High volumes from 2015/16 registrations, March 2019 plate change, WLTP delays normalising, timing of Easter and May bank holidays • CAP HPI predict a more normalised position, with recent heavy drops in value unlikely to continue H2 2019 • Longer term, market expected to be reasonably healthy. Whilst Brexit is a big unknown, it is not expected to adversely impact values Source: CAP HPI 13 8 7.2
Financial review Richard Blumberger Chief Financial Officer
H1 2019 key financials • Like-for-like revenue up 0.9% to £1,160.6m • Strong like-for-like outperformance against the market for new retail units, new fleet units and used units • Gross margin remains strong at 11.4% • Like-for-like net operating expenses up 1.6%, excluding the impact of lease disposals up 2.0% • Reported underlying PBT of £15.2m, in line with our expectations • Net assets of £200.7m, £2.57 per share • £123.9m of freehold / long leasehold property • Adjusted net cash £5.8m, up £10.8m from the year end • £6m to settle all historic defined benefits pension liability • £3.5m acquisition of six ŠKODA retail centres • £8.8m capital expenditure including £1.7m freehold acquisition of Northampton ŠKODA • £1.7m increased dividend payments to shareholders • Interim dividend 2.85p per share, up 32.6% • First time adoption of IFRS 16 • Fully retrospective method, prior year adjusted • Reported net debt £82.2m (H1 2018: £92.7m) 15 10 5
Jaguar I-Pace 16
Strong performance in challenging market conditions • Reported revenue benefitted Reported (£m) H1 19 H1 18 Var from acquisitions Revenue 1,183.3 1,162.9 1.8% • EPS down due to lower profit and higher effective tax rate Underlying PBT 15.2 16.0 (5.3%) • Return on capital employed Underlying EPS 15.0 16.1 (6.8%) impacted by ŠKODA loss ROCE 11.7% 12.7% (97bps) making acquisitions • Like-for-like gross margin Like-for-like (£m) H1 19 H1 18 Var remains strong, driven by strong new car margin performance Revenue 1,160.6 1,150.0 0.9% offsetting margin pressure in used vehicle and aftersales Gross profit 132.5 131.6 0.7% Gross profit % 11.4% 11.4% (3bps) Operating expenses (112.3) (110.5) (1.6%) Operating profit 20.2 21.1 (4.1%) ROS 1.7% 1.8% (9bps) 17 11 11
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Like-for-like: Focus on growth to offset market pressures Margin: -0.5m Volume: +1.5m £m Volume Margin 19 12 14
Range Rover Velar SVAutobiography Dynamic Edition 20
Class Leading Returns Strong like-for-like outperformance to the market Like-for-like Like-for-like H1 19 H1 18 Var H1 19 H1 18 Var revenue (£m) unit sales New 559.7 580.7 (3.6%) New retail 15,586 15,653 (0.4%) Used 498.8 467.0 6.8% Fleet 9,167 9,271 (1.1%) AFS 127.1 124.9 1.8% New 24,753 24,924 (0.7%) Other (25.0) (22.7) (10.2%) Used 23,630 22,053 7.2% Total 1,160.6 1,150.0 0.9% Total 48,383 46,977 3.0% Like-for-like Like-for-like H1 19 H1 18 Var H1 19 H1 18 Var gross profit (£m) gross profit (%) New 43.0 40.3 6.6% New 7.7% 7.0% 73bps Used 32.8 33.7 (2.5%) Used 6.6% 7.2% (62bps) AFS 56.5 57.5 (1.6%) AFS 44.5% 46.0% (154bps) Other 0.2 0.1 43.9% Total 132.5 131.6 0.7% Total 11.4% 11.4% (3bps) 21 13 12
Maserati Levante 22
Like-for-like: Proactive cost management Cost headwinds Management actions £m 23 14 14.3 14
New Mercedes-Benz EQC 400 4MATIC 24
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