Interesting times at Cambria Automobiles. Earlier this month it announced its half year results, which were positive given the impact of the pandemic with showrooms shut for business. The dealer group saw underlying pre-tax profits rise 55.5% at £9.8m on turnover down 16% to £254.7m for the half year to 28 February 2021. So far so good.
During the period new vehicle sales reduced by 16.6% with an 8.8% reduction in average profit per unit. Used vehicle sales took a more significant hit, down 30.8%, but the good news was this was partially offset by a 18.2% improvement in average profit per unit. Aftersales revenue decreased by 12.7% but again there was an improvement in gross profit. During the year it set up SOGO Mobility as a provider of flexible leasing solutions for corporates and individuals
The performance was delivered through cost cutting and the benefit of Government support packages including furlough and business rates relief. It has not used the Government VAT deferral scheme. It also carried out a detailed expense review by site and department to minimise cash burn during lockdown period.
Cambria CEO Mark Lavery said he was happy with the performance. “While I am pleased with the overall performance of the group in the first half of our financial year, the imposition of various lockdown restrictions has clearly had a material impact on the volume of cars that we have been able to sell to our guests. There is no doubt that most retail operations learnt vital lessons during Lockdown 1 to adapt to different trading models and our business was no different, seamlessly migrating towards a digital click and collect offering for vehicle sales while operating the aftersales departments as efficiently as possible.”
Vehicle supply shortages
Results aside, Lavery dealt with the current problems dealers are facing because of the supply of semi-conductors in the market, which is causing supply difficulties with new cars. He said factory closures at several makers are having an impact on vehicle supply for retail and fleet car and van markets.
“When you look at Ford Motor Company on record as saying they’ll produce 1.2 million less vehicles this year. It gives you some idea how profound the impact is.
” In our worst case for one brand, we’ve got one new car left to sell and we don’t see another one until next month right now, you know, these are just extraordinary times and I think it will get worse rather than better.
“We think it’s here for the balance of the calendar year and it might stretch into next year.”
Lavery also commented on supply shortages in the used car market, which is causing values to rise and said the market was like 2009 after the financial crisis.
“I can liken it to 2009 and early 2010 when we came out the global financial crisis.
“You’ve got residual values increasing because there was a significant restriction in new vehicle supply. In 2008 a lot of the factories were mothballed. We’ve got the same circumstances happening again.
“It is really difficult to source stock other than by way of part exchange,” he said.
Management buyout
What Lavery did not talk about – he cannot as it is subject to stock market rules – what was the current move by himself and two directors to buy the company.
All going to plan Cambria could be the subject of a management buyout in 2021. Last month the Cambria Board said it had consented to Lavery, finance director James Mullins and motors division MD Tim Duckers exploring the possible acquisition of the shares they do not currently own a at price of 80 pence in cash per Cambria share. Discussions between the parties are ongoing but now the deadline has been extended by 28 days to 17 May. The last dealer plc to delist from the London Stock exchange was HR Owen, which was bought by Berjaya Philippines in 2013.
Cambria is currently listed 24 in the Motor Trader Top 200 with annual turnover of £657.8m and pre tax profits of £12.5m in the year to August 2019. It is ranked 21 by return on sales with 1.9% while profit per employee puts it in 10th slot at £11,612. The group has moved in recent years to invest heavily in prestige franchises like Bentley, Lamborghini and McLaren and its first Rolls-Royce dealership.
Written for Motor Trader May 2021 issue by John Kirwan
