Car dealer Motorpoint's share price fell three per cent this morning after blaming a "disappointing" first half of the year on the Brexit vote.
Revenue jumped 11.5 per cent to £408.9m in the six months to September. But operating profits flopped nearly a third – down from £10.3m to £7.0m.
Motorpoint managed to keep its nose just above the water when it came to its bottom line, reporting profit before tax and exceptional items of £2.4m, down by 75 per cent compared with the prior year.
It did also, however, account for £4.0m of floatation costs from its decision to go public in May. Because of the way float costs are recognised in accounts, the actual cash cost was higher at £6.2m.
Operating cash flow fared better as the company generated £12.5m during the period (prior to the exceptional item), up from £8.0m in the prior year. Cash reserves were boosted by reducing stock levels.
A dividend of 1.33p was declared, the first in the company's history.
Why it's interesting
The car dealer industry has steadfastly championed the message that the Brexit vote was having limited-to-no effect on financial performance.
Motorpoint seems to be the first to break ranks. Its chief executive Mark Carpenter putting the matter in no uncertain terms:
The uncertainty around the result of the EU referendum contributed to the group's disappointing performance in the first half.
Read more: Brexit may finally be affecting UK car sales
The fact is, though, the revenue numbers suggest the company managed to sell more cars during the period.
Although profit margins – the amount of profit a company makes on each sale – fell a smidge – down from 7.7 per cent to 7.2 per cent; it was a hike in operating expenses which hit Motorpoint hard. They increased from £17.9m to £25.8m.
Ignoring the impact of the float costs, the bump in cash is due to Motorpoint making the decision to reduce stock levels "in the face of anticipated low consumer confidence following the EU referendum result". This could be a concerning sign for future financial performance.
What the company said
Whilst some uncertainty around Brexit remains, the three new sites that we have opened in the last 12 months are performing well and we anticipate they will deliver a solid performance in the second half.
Despite the softening in consumer confidence, market conditions since the period end have remained stable with a good level of stock availability and margins have returned to normal levels.