TIDMCAMB
RNS Number : 7388X
Cambria Automobiles Plc
02 September 2020
2 September 2020
Cambria Automobiles plc
("Cambria" or the "Group")
AIM: CAMB
Pre-close Trading Update and Notice of Preliminary Results
The Board of Cambria provides the following update on its
trading for the eleven months to 31 July 2020:
Covid-19 Response
As expected, the Group's trading performance in the eleven
months of the current financial year was significantly disrupted as
a result of the temporary closure of all car showrooms in line with
Government guidance for the period between 24 March 2020 and 31 May
2020.
As per the update contained within the Interim Results issued on
6 May 2020, the Group reacted swiftly to the lockdown in order to
mitigate the impact of the closure of the car showrooms. Key
actions taken included significant cost reduction measures, salary
reductions for Directors, tight management of working capital,
suspension of capex projects and a detailed review of the business'
underlying cost base. The Group has utilised the Coronavirus Job
Retention Scheme (CJRS) and applied for the relevant business rates
relief. During the period the Group has also maintained timely tax
payments so that it does not build up a deferred payment
liability.
The Group's aftersales facilities remained open on a limited
basis throughout the lockdown to provide services to key workers
and operated in line with government guidance.
The impact of the lockdown on the Group's financial performance
for March, April and May was material compared to the prior year
and management expectations, despite the actions taken. Following
the re-opening of the car showrooms on 1 June 2020, the trading
performance has been positive with the results for June and July
well ahead of the previous year and management expectations. The
trading bounce back seen in June and July has not fully recovered
the negative impact of lockdown, though it has gone some way to
mitigating it.
Trading Update
Before the lockdown period, the new car market was already
experiencing disruptive factors as a result of the change in
emissions regulations where manufacturers are adjusting vehicle
production and supply in order to meet the challenging emissions
objectives, while minimising the fines that will be levied upon
them for exceeding those targets. The lockdown period led to the
closure of many of the manufacturers' production lines and
therefore stopped production of new vehicles for the period.
The Group's sales of new retail units to private guests in the
eleven month period were down 26.6% while total new vehicle unit
sales, including fleet and commercial, were down 27.6%. The Group's
change in franchise mix towards the High Luxury Segment continued
to help enhance the profit per unit on each vehicle supplied during
the period, which was up 4% year on year.
Used vehicle unit sales continued to perform well either side of
the lockdown period, with the number of unit sales down 21.6%
compared with the same period in the prior year, slightly offset by
the continued improvement in gross profit per unit which was up
4.3%.
Overall, the Group's aftersales operations have performed well
either side of lockdown. As a result of the lockdown period,
aftersales revenue for the eleven months was reduced by 13.6%.
As outlined above, the Group took substantive actions in
relation to its cost base and has utilised the available Government
support stimulus. During the period the Group has received the
benefit of GBP3.7m of CJRS grant and has benefitted from
approximately GBP1.1m in business rates reduction.
The Group is in the process of implementing a cost reduction
programme and this will involve a significant reduction in the
number of Associates in the business. The programme will be
complete by the time the preliminary results are released and a
detailed update will be provided at the time.
The Group embarked on a strategic shift away from certain volume
franchises in 2018 and replaced them with High Luxury Segment
Franchises. As these businesses continue to mature they do provide
the Group with a robust earnings stream in unprecedented times.
As part of that strategic pivot towards the High Luxury Segment,
the Group was able to add the Aston Martin and Rolls-Royce Motor
Cars Franchises in Edinburgh in January 2020.
Outlook
Whilst the trading performance trends in June, July and into
August are encouraging, the order bank for September is building at
a slower rate than the previous year and the Board has concerns
around the broader economy and customer confidence heading into
calendar Q4 2020. The CJRS has undoubtedly provided a significant
underpin to household incomes during the pandemic however when the
scheme ends on 31 October the Board expects there to be a negative
impact on UK unemployment data.
Looking forward, there is little clarity around the terms of the
UK's departure from the EU and whether a free trade agreement will
be in place to avoid tariffs on the importation of cars and parts
to the UK. A 10% tariff on these products would have a significant
impact on sales volumes.
More demanding emissions regulations will continue to impact the
mix of cars that the manufacturers want to sell in the UK in their
attempt to avoid the fines for emissions in excess of their
targets. This will continue to drive R&D spend on technology
development by the manufacturers at an unprecedented rate.
Based on these facts, the Board continues to take a prudent
approach to ensure that the Group is prepared for potentially
challenging economic conditions from Q4 2020 onwards.
As previously advised, we are not providing guidance relating to
the coming financial year due to continued uncertainty. The Group
will announce its Preliminary Results for the year to 31 August
2020 on 25 November 2020.
Mark Lavery, Chief Executive of Cambria Automobiles plc,
commented:
"Firstly, I would like to thank all of our management and
Associates who have worked tirelessly throughout the lockdown.
Their dedication, flexibility and application has enabled the Group
to handle the most difficult trading period in its history in a
robust and positive manner. I would also like to thank our brand
and banking partners who have been incredibly supportive in this
challenging time for the Group. I believe that we acted decisively
in unprecedented circumstances to mitigate the impact of the forced
lockdown on the Group.
The challenges that faced the motor retail industry before
lockdown still remain, as does the uncertainty created by Brexit.
The recession that is currently engulfing the UK has not yet hit
motor retail. The Group has been prudent and has operated with a
much reduced Associate base so that the Group is prepared for most
eventualities. At the same time, with our diversified portfolio of
excellent brand partners, the Group has demonstrated its resilience
and we have managed our cash position well, ensuring that we keep
up to date with all our obligations. As a result of the actions
taken the Group's financial position remains robust and we are well
prepared for the challenges and opportunities ahead."
-Ends-
Enquiries:
Cambria Automobiles Tel: 01707 280851
Mark Lavery, Chief Executive
James Mullins, Finance Director
www.cambriaautomobilesplc.com
N+1 Singer - NOMAD & Joint Broker Tel: 020 7496 3000
Mark Taylor
Zeus Capital - Joint Broker Tel: 020 7533 7727
Dominic King
FTI Consulting Tel: 020 3727 1000
Alex Beagley / James Styles /
Sam Macpherson
About Cambria - www.cambriaautomobilesplc.com
Cambria Automobiles ("Cambria") was established in 2006 and has
built a balanced portfolio of high luxury, premium and volume car
dealerships, comprising over 40 franchises representing major
brands across the UK. The Group's businesses are autonomous and
trade under local brand names, including County Motor Works, Dees,
Doves, Grange, Invicta, Motorparks and Pure Triumph.
The Group's strategy is to complement its existing franchise and
brand portfolio by acquiring earnings enhancing operations, using
its strong balance sheet and disciplined approach to capital
allocation.
Cambria's medium term ambition is to create a GBP1 billion
turnover business producing attractive returns on capital.
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