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S&U says it is in fine fettle as trading rebounds

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S&U PLC (LON:SUS) has said it is in “fine fettle” as the motor finance group revealed trading and profitability have rebounded despite a slowdown in November due to the second coronavirus pandemic lockdown.

In a trading update for the period from August 1 to December 8, 2020, the group said demand for used cars and their auction values have “recovered well”, which was reflected in an improved rate of transactions at its Advantage motor finance business with net receivables at £253mln and customer numbers of 63,000.

READ: S&U highlights encouraging rebound in trading following lockdown

S&U also said that the pandemic is “prompting an unease about public transport” and that, as a result, the market was favouring the smaller used car sector in which Advantage specialises. The group added that the business is using the pandemic to “prepare for recovery and to embed long term operational improvements”.

Meanwhile, the firm said its Aspen Bridging finance arm has achieved a “landmark” £100mln of lending since its foundation and transactions have improved considerably over the period with net receivable currently at £29.6mln compared to £18.5mln last year.

S&U also said its loan quality has improved with no defaults remaining, while cash generation has also been “significant” with borrowings down to £103mln from £108mln in July.

Looking ahead, S&U chairman Anthony Coombs said the firm has “great confidence in the future” despite the “persistent drag anchor that is [coronavirus] and the possibly inevitable zigzagging in Government policy to deal with it”.

“Aside from our traditional strengths –  experience, conservative financial policies and sustainable growth –  most of all I pay tribute to the dedication and sensible ambition of our people.  To paraphrase Liverpool FC’s Jurgen Klopp, whatever [coronavirus] brings “we deal with it, recover, prepare and go again”, he added in the trading statement.

In a note on Wednesday, analysts at finnCap retained their 2,000p target price on S&U, saying the “strong update” proved the resilience of the group and that the core motor division “has the potential to benefit from a greater interest in used cars as household budgets potentially come under pressure in 2021”.

The company’s shares rose 3% to 1,885p in mid-morning trading.

–Adds broker comment and share price–

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