Analysts slash Motorpoint’s forecast following £10.5m profit slump
Analysts at Liberum have slashed their forecasts for Motorpoint after the car dealer reported a £10.5m slump in profit.
“We reduce our FY23E profit before tax by 50 per cent to £7m,” Liberum’s senior analyst Sanjay Vidyarthi wrote.
Motorpoint – which posted today a record £785m revenue for the six months ended 30 June – reported a 77 per cent drop in profit.
Profit before tax has in fact gone down to around £3m compared to last year’s £13.5m.
The company said the decrease was due to a £4m investment to expand its share in the 0-4 year-old car market from 2.9 per cent to 3.6 per cent.
“The board strongly believes there is a significant opportunity for Motorpoint to become a highly profitable market leader, and that certain targeted strategic investments are important particularly as some of the Group’s competitors are less ambitious or lack financial capacity,” the company said in Thursday’s trading update.
“The results of the strategic investments made to date underpin this belief and the current strategy.”
The car supermarket opened its 18th dealership in Edinburgh in late September, while the 19th will be inaugurated in Coventry at the end of the month.
Economic volatility and the consequent consumer uncertainty are also expected to reduce UK car sales volumes.
“Although the company does not provide specific profit guidance, it believes these macro factors will continue to challenge financial performance in FY23, the extent of which is difficult to predict,” Motorpoint added.