North East motor dealers Vertu are set to add to their growing estate as they continue on the acquisition trail after a record trading performance.
The Gateshead-headquartered business has executed a successful “buy and build” strategy over several years, acquiring smaller firms and turning them into strong performing businesses.
Half year figures for the eight-year-old business now shows the strategy has been converted into strong cash generation, with turnover for the six months ended August 31 2014 topping £1.083bn, an increase of 29.5%.
Teamed with favourable market conditions, the strategy has also increased pre-tax profit also rose, by 48.8% to £12.8m and, as a result, the return to shareholders will be increased.
The interim dividend is increased by 16.7% to 0.35p per share and will be paid in January 2015.
Both the used cars and aftersales divisions have seen growth in volumes, revenues and gross profits – both ahead of national averages.
Chief executive Robert Forrester said recent acquisitions are performing well and that the firm will add to its network of 111 UK sales and aftersales outlets in the coming months.
He said: “Clearly it’s a strong set of results and we’ve converted it well into cash. We’ve got a lot of investors in the North East and the dividend is going up.
“The dividend is clearly important because it shows confidence from the board and it shows we understand the needs of shareholders.
“The profit is going up because of favourable market conditions but also because we’ve been buying lots and lots of businesses over the last four to five years that were previously underperforming and we are turning them around.
“So with our buy and build theme we’ve got the momentum right and we’ve got the processes right. The acquisitions are still coming through too so it’s all coming together – it’s a strong business with a lot of growth potential in it.
“There are quite a few options for acquisition that we’re looking at, some in the advance stages and they’re broadly in the area we operate in, which now covers Scotland to Exeter.
The inner workings of Vertu Motors have been receiving a lot of attention from European manufacturers, many of whom have been asking to visit North East facilities.
“We’ve got 180 people in Gateshead involved in aftersales and that centre is fairly well renowned in European retail and we have manufacturers once a month asking to come over and see us. I’ve got people from Serbia coming over next month and a group from France are in Darlington today.
“I’m happy to share what we do because you can’t replicate what we do, it’s very difficult to replicate.”
During the six months new jobs were created, growing headcount to 4,200, as six new sales outlets were opened.
Mr Forrester said: “We’ve created and continue to create new jobs in the North East. For example, we’ve set up a new entity to do live chat. We took people already in the business and created five extra jobs, and they are available until 10pm on live chat, which customers can go through the website to ask query. That is likely to expand.”
Heavy investments have also been made into existing property assets. In Durham, a dealership is being demolished and completely rebuilt, representing a £2.5m investment.
Next year the firm will also be the sole representative for the new Nissan Infiniti Q30 when it is manufactured from the Japanese firm’s Sunderland plant, 10 miles away from Vertu’s brand new property in Silverlink North Tyneside.
With prosperity returning to the UK economy, Mr Forrester is confident growth can be sustained, despite worries within the eurozone.
With UK employment rates rising, more and more families are getting into work and needing cars, helping to drive sales.
A recent advertising campaign triggered strong sales last weekend, with 1,137 cars being sold in one day – including 10 used car sales at the newly-opened Fiat dealership in Newcastle.
“We’re in a period of economic growth. The UK is in fine fettle and employment levels are staggeringly high. Europe, however, is clearly battered so we will have to see what happens there, but I very much doubt we’ll go into another downturn in the next 12 months.