Shares in Motorpoint (LON:MOTR) flashed green after the used car dealer said it expects underlying pre-tax profits for the half ended 30 September to be up an impressive 81% year-on-year. Steered by CEO Mark Carpenter, Motorpoint also reiterated its recently-raised FY27 guidance for taxable profits in the £9.8 million to £10.8 million range.
However, Shore Capital believes its H2 forecasts look conservative. And given Motorpoint’s positive profit momentum, Sharesify reckons there could be further upgrades coming down the track.
Pedal to the metal
Motorpoint sells nearly new vehicles. These are typically cars under six years old with less than 40,000 miles on the clock. The Derby-headquartered company operates from a nationwide store network. It also owns Auction4cars.com, the UK trade-only car auction site.
In an H1 FY27 trading update, Motorpoint said it expects to deliver H1 underlying pre-tax profits of around £6.5 million. This 81% year-on-year growth reflects volume growth, continued strong metal margins and disciplined cost control, which is driving attractive operational gearing.
During H1, Motorpoint generated retail volume growth of 7.6%. This reflected continued outperformance against the wider used car market as well as a contribution from the new Leeds store, which opened for business in July.
Carpenter’s steer
‘Motorpoint has delivered another strong period of volume and profit growth,’ said Carpenter. ‘This is despite a backdrop of consumer uncertainty fuelled by inflation, high interest rates and the impending Government budget.’
| Year to March | FY26A | FY27E | FY28E |
| Revenue (£m) | 1,269 | 1,369 | 1,478 |
| Adjusted pre-tax profit (£m) | 7.5 | 10.3 | 13.5 |
| EPS (p) | 6.6 | 9.2 | 12.1 |
Source: Motorpoint, Shore Capital estimates
Carpenter added: ‘The investments made in technology have driven tangible operational and financial benefits, helping us source the right vehicles and price them for optimised rate of sale, which results in consistently high metal margins.’
Forecasts look conservative
House broker Shore Capital commented: ‘Full-year guidance remains for £9.8 million to £10.8 million PBT, which includes a fair dollop of caution, and we reiterate our recently raised forecast of £10.3 million, earnings per share (EPS) of 9.2p, growth of circa 39%.
‘With strong momentum across volumes, margins and profitability, Motorpoint remains firmly on the front foot.’
The backdrop for automotive retailers remains challenging due to elevated fuel costs, inflation and the potential for further interest rate rises. UK consumers remain cautious when it comes to big ticket spending and this is a sector with notoriously low margins.
Given this challenging environment, Motorpoint’s recent run of upgrades is all the more impressive. The company’s post-Covid profit rebuild continues and the firm has plenty of growth to go for in a fragmented UK used car market.
Motorpoint’s competitive pricing is helping it gain market share. And its technology-enabled operating platform, which uses advanced AI, data and digital capabilities, continues to accelerate volume growth and enhance profitability.
