Motorpoint Group PLC’s (LON:MOTR) chief executive has reiterated the firm’s plans to “more than double revenue and profit in the medium term” despite the company’s performance taking a hit in its previous financial year amid the coronavirus pandemic.
In its results for the year to March 31, the vehicle retailer reported a pre-tax profit of £9.7mln, down from £18.8mln the year before, while revenues sank to £721.4mln from £1.02bn as a result of the pandemic and lockdown measures implemented by the UK government.
Despite the difficulties, Motorpoint said its gross margins had improved during the year to 8.7% from 7.8% due to what it said was efficient vehicle sourcing, improved operational controls and strong demand following the first UK lockdown.
Looking ahead, the firm said since its branches reopened trading has been “strong and significantly ahead of the same period in FY20” while margins for both its retail and wholesale businesses were well ahead of seasonal levels due to increased use of data in pricing decisions and strong demand.
While the group cautioned that a shortage of semi-conductors was impacting new car production, it added that this is expected to benefit sales of “nearly new cars” in the short term and “could result in a future headwind.
“I am delighted with our performance in the year given the external challenges faced as we have transformed our capability by continuing to invest in our E-commerce execution. We now have a fully scaled Home Delivery service, an integrated, end-to-end digital customer journey, additional capacity to grow through our increased preparation and branch presence, and an ambitious growth strategy to more than double revenue and profit in the medium term through increased investment in technology, marketing, data and talent”, Motorpoint chief executive Mark Carpenter said in a statement.
“Motorpoint is already well advanced on its journey to become the dominant E-commerce led omnichannel used car retailer in the UK with an unrivalled consumer offering in the nearly new market, coupled with a digital-led auction channel with huge potential. We will continue investing in the business to achieve our medium term goal of at least doubling revenue and growing E-commerce revenue to over £1bn…We now have an opportunity to grow rapidly as we continue our transformation into an E-commerce led business with huge potential”, he added.
In a note on Wednesday, analysts at broker Liberum upped their target price for the company to 435p from 290p and retained their ‘buy’ rating, saying while the firm’s targets were ambitious, “the track record is strong and we have confidence in the management team to deal with the threat from online disruptors”.
Motorpoint shares were flat at 279p in early trading.