Vertu Motors FY26 results: aftersales strength kept profits standing in a difficult car retail market
Vertu Motors has delivered a decent set of FY26 results in a market that has been anything but friendly. The headline numbers were softer year on year, but the business still came in ahead of market expectations on adjusted profit before tax, and that matters.
The big message is simple enough: new car profitability was weak, but aftersales – servicing, repairs and parts – did the heavy lifting. For retail investors, that is actually a reassuring trait in a tougher cycle because aftersales income tends to be steadier than new car sales.
| Key FY26 numbers | FY26 | FY25 |
|---|---|---|
| Revenue | £4,833.8 million | £4,763.9 million |
| Adjusted profit before tax | £24.5 million | £29.3 million |
| Profit before tax | £20.3 million | £24.8 million |
| Basic adjusted EPS | 5.71p | 6.58p |
| Free cash flow | £30.7 million | £37.3 million |
| Net debt | £61.3 million | £66.6 million |
| Dividend per share | 2.05p | 2.05p |
| Net tangible assets per share | 75.9p | 72.9p |
Why Vertu Motors beat expectations even though profit fell
Adjusted profit before tax dropped from £29.3 million to £24.5 million, so this was not a growth year in earnings terms. But the company still beat the compiled analyst consensus of £24.0 million, with the top end of the range at £24.4 million.
That might sound like a small beat, but in a low-margin retail business under sector pressure, even a modest outperformance shows management kept a grip on the business. Revenue rose 1.5% to £4,833.8 million, which also tells you this was more of a margin problem than a collapse in demand.
What hurt profits: ZEV mandate pressure and weaker new car margins
The main culprit was weak profitability in new vehicles. Vertu says the Government’s ZEV mandate – effectively pushing manufacturers towards higher battery electric vehicle sales – distorted volumes, margins and sales channels.
In plain English, manufacturers are discounting heavily to hit electric vehicle targets, and that squeezes dealer profits. Vertu’s Core Group new vehicle gross profit fell by £8.7 million, while fleet and commercial gross profit dropped by £4.2 million.
That is the sore point in this update. The business is still profitable, but new cars are clearly not earning what they used to. Management is right to call this out because it is a structural issue for the sector, not just a one-off bad month.
Aftersales profits are the star of the Vertu Motors investment case
This is where the results get more attractive. Aftersales gross profit rose from £236.1 million to £250.2 million, and aftersales now generates over 46% of Group gross profit.
That is a serious cushion. Servicing, parts and repairs are usually more dependable than selling new cars, and Vertu has some useful built-in repeat business with around 160,000 live service plans and more than 50,700 Motability vehicles under contract.
Core Group aftersales gross profit increased by £8.4 million year on year, with service alone up £7.2 million. This helped offset weakness elsewhere and underpins the company’s claim that earnings are resilient.
My view: this is the most important number in the whole release. If you own dealership shares, you want a company that can still make money when the shiny front-end showroom gets messy. Vertu looks better positioned than many on that score.
JLR cyber-attack impact was mostly offset, but it still caused disruption
Vertu also had to deal with the Jaguar Land Rover cyber-attack in the second half. Gross profit losses from this were about £3.9 million, while insurance proceeds of £3.4 million were recognised in FY26.
So the financial damage was largely recovered, but not fully. It is a good reminder that operational disruption can hit dealerships in ways that have nothing to do with consumer demand.
Cash flow, assets and buybacks show a well-backed balance sheet
One of the strongest features of this results statement is the balance sheet. Free cash flow was £30.7 million, net debt improved to £61.3 million, and shareholders’ funds stood at £357.5 million.
Better still, the business has a freehold and long leasehold property portfolio of £327.1 million. That asset backing matters because it gives downside support and some flexibility if the market stays rough.
Net tangible assets per share rose to 75.9p. That is useful context when the board says the shares are materially undervalued and keeps buying them back.
- £10.6 million spent on share buybacks in FY26
- 17.4 million shares repurchased for cancellation in the year
- More than 21% of issued share capital bought back since FY18
- Another £12.0 million buyback programme announced in March 2026
The dividend was held at 2.05p per share, with a final dividend of 1.15p proposed. That is not exciting income growth, but it is sensible capital discipline in a pressured market.
Cost savings and site closures show management is being realistic, not rosy
There is some pain behind the scenes. Non-underlying costs were £4.2 million, including redundancy costs, site closure costs, impairment charges and a property remediation provision.
The company reduced headcount by around 280 colleagues in late FY26 and says a further £10.0 million cost efficiency programme has been delivered to help FY27. That is not a glamorous story, but it is the right one if new car margins remain weak.
Importantly, Core Group operating costs increased by only 1.1% year on year, despite wage inflation and higher Employers’ National Insurance costs. That is a decent effort.
Current trading in FY27 is encouraging, with March and April ahead of last year
Perhaps the best part of the update is the opening read on the new year. Trading profit for March and April 2026 was ahead of the prior year period.
Aftersales again led the charge, with a £2.9 million uplift in Core Group gross profit in those two months. New vehicle retail and Motability profit improved by £1.0 million year on year, although gross profit per unit stayed a bit lower.
Used cars were stable, and the new “Value Cars by Vertu” push into the 7-to-14-year-old used car segment is interesting. Management says early signs suggest it will add incremental profits, though exact figures are not disclosed.
Motor finance redress is a risk worth watching, but no provision has been taken
Vertu also addressed the FCA motor finance redress scheme. The company says it acted as a credit broker and will have been involved in agreements that qualify for redress, but its role under the scheme is limited to providing information to lenders.
The Board does not currently think a provision is needed. That is positive, but there is still a wider industry risk if lenders pull back from the market, which could reduce broker income in future.
The scheme has also been formally challenged and postponed, so this remains unresolved rather than eliminated.
What these Vertu Motors final results mean for investors
This was a solid rather than spectacular result. Profits fell, and the new car market remains difficult, so there is no point pretending everything is booming.
But there is plenty to like. Aftersales is strong, cash generation is healthy, net debt is under control, asset backing is robust, and current trading has started well. Add in continued buybacks and stable dividends, and the overall picture is more resilient than the headline profit decline suggests.
My take: this RNS reads like a business managing through a sector squeeze better than most. If the UK motor retail market stays messy, Vertu looks built to cope. If conditions improve, the operational leverage and consolidation opportunities could become more interesting.
For now, the key investment case is not flashy growth. It is resilience, cash flow and assets – and in this market, that is not a bad hand to be holding.
