Motorpoint swings to loss despite record revenue

(Sharecast News) - Used vehicle retailer Motorpoint reported record revenue of £1.44bn in its final results on Wednesday, up from £1.32bn year-on-year. The London-listed company did, however, swing to a loss before tax of £0.3m for the 12 months ended 31 March, from a 2022 profit of £21.5m.

It put the decline down to rising financing costs, limited stock availability, the depreciation of electric vehicles, and increased investment of £6.1m to deliver strategic objectives.

Despite that, Motorpoint said the results showed its ability to effectively manage cash resources, achieving a significant net cash improvement of £26.8m since the end of March 2022.

That improvement was attributed to enhanced working capital management and the proceeds of two sale-and-leaseback transactions, which amounted to £9.7m.

The company meanwhile swung to net cash of £5.6m, from net debt of £21.2m at the end of last fiscal year.

To strengthen its financial position, Motorpoint said it had extended its unsecured loan facility of £35m to June 2026, with the option of two further one-year extensions subject to the agreement of both parties.

Looking ahead, Motorpoint Group said it was cautiously optimistic, acknowledging the continued impact of rising inflation, interest rates, consumer uncertainty, and vehicle supply challenges on the used car market.

However, the firm said it had a proven track record of demonstrating financial resilience during downturns, showcasing market share gains and effective cash resource management.

The company was planning to focus on cash conservation in the short term by increasing margins and reducing its cost base.

Those measures were intended to enhance profitability and position the company as a leaner and more valuable business, ready to take advantage of opportunities in a normalised market.

"[The 2023 financial year] was marked by record revenues and further strategic investments as we endeavour to provide customers across the UK a seamless car buying experience," said chief executive officer Mark Carpenter.

"This investment is thus far delivering good results and has positioned the group better for the future.

"This allows us to pause the level of ongoing investment, given the current consumer and macro environment, while enjoying the efficiencies we have now built into the business and continuing to deliver on our growth strategy within the market constraints."

Carpenter said that while the impact of higher interest rates and inflation would continue into the 2024 fiscal period, new car registrations had been steadily increasing, with the fleet market driving much of the growth, which would in turn benefit used vehicle supply.

"This, coupled with continued market share gains and progress on our key initiatives, will enable Motorpoint to emerge from the current environment in a strong position to more aggressively pursue profitable market leadership."

At 0848 BST, shares in Motorpoint Group were down 0.4% at 124.5p.

Reporting by Josh White for Sharecast.com.