Marshall Motor Group is now a £1 billion turnover motor retailer.
The statement was tweeted by chief executive Daksh Gupta (pictured). It means Marshalls could claim to be one of the small band of groups in the AM100 to have exceeded the landmark figure.
In the November AM100 update Marshall – at number 10 – had a turnover in its statutory accounts in 2012 of £794 million. The remainder of the top 10 all had £1bn-plus turnover.
The achievement is a symbolic milestone in what Gupta has called phase one of the group’s business plan: the first five years of his tenure as CEO which has seen Marshall grow from being a £250m turnover business.
For the £1.3bn turnover Marshall Group – which includes leasing, aerospace, vehicle engineering and specialist vehicles – the motor division will contribute about 40% of operating profit, Gupta said.
In 2008, when Marshalls had about 40 dealerships, turnover per site was £9.7m. Today with 70 sites its £15.6m, a 61% increase.
“It's quite a well-known fact that we were a bit sleepy pre-2008, and while the figures today are impressive, we were starting from a low base,” Gupta said.
He said the motor group is expecting an operating profit of about £12m for the year. Its underlying EBITDA is around £15.1m and return on capital employed (ROCE) 17%.
He eschews too much focus on return on sale because it can be “distorted”.
“It can be distorted in a number of ways. The profitability of your business should be based on shareholder return, and shareholder return is based on what you've got invested in the business.
“Return on sales can be distorted, for example, by your fleet business. We’ve grown our fleet business from 2,000 units in 2008 to 10,000 last year.
“It can also be distorted because of the scale of change that you've gone through as a business.
“So, if you've made significant acquisitions, you'll see a drop in RoS as we experienced in 2011 and 2012 as I bought broken businesses and sold others, which have a negative effect on my P&L as I’m taking exceptional losses.”
“2014 will be my first year with no disposals. It will also be the first year where we haven't got a huge amount of churn in the brand portfolio and we're concentrating on driving the business, which is the core of phase two.”
Gupta also stressed the changes in the business have been self-funded from profits in the motor group.
He also said a 20% ROCE is within the group’s grasp.
“There is massive latent potential, particularly the acquired businesses.
“If you take Silver Street Automotive (bought in February 2013) as an example, it had been losing more than a million pounds three years running. Now, it contributed a million pounds last year, but it should be doing significantly better than that. And it will.”
Phase one of the business development plan saw Gupta lead the reshaping of the group.
“We’ve reshaped the group; we’ve built it nationally, we've balanced our brand portfolio so we stopped competing with ourselves in East Anglia, increased our depth of representation with our core partners, and increased it into scalable markets.”
The five years saw Marshalls exit 22 businesses from an original 42. But while it was represented in six counties in 2008, it is now in 17, including Devon, Cumbria, Yorkshire and Essex.
Two thirds of our businesses were with volume brands in 2008,” Gupta said.
“In a recession, the first people to stop spending money are those who typically buy volume brand cars. But the growth in the prestige sector has been because a lot of buyers in this market have been able to maintain their lifestyle.
“So we've reduced the breadth of partners, but concentrated on having more depth with those we have. So a good example is Honda. We had one Honda, now we’ve got seven. We had three Volvo, we have six now. We had no VW, today it’s five. Mercedes zero, five today, Jaguar two, now four.
“So you can see how we've grown: 19 prestige businesses, 23 alternate premium (eg Volvo, Honda, VW) and 26 volume.”
VAG brands contribute more than £300m of total turnover.
And Gupta has bought underperforming businesses that need time and attention to reach their full potential – and all the time impacting negatively on the bottom line.
The Mercedes businesses Marshalls bought have turned in their first profit for three years since they were acquired from Pendragon.
“If a franchise comes up for sale its either being driven by the manufacturer because they're not happy with the performance; it's loss making and it's about to go into administration; or somebody's taken a strategic decision to get out because they haven't got the capital to invest.
“There are a number of reasons that will trigger an opportunity for us. But it will always be a combination of one of the above - or it's a predatory approach. If you look at all we've bought it's been typically driven by underperformance.”
“What I said to the board in 2008 is, we’ve have an opportunity due to the recession, to transform the portfolio. And that's exactly what we've done.”
Staff numbers in this period have grown from 800 to 2,100 - a 275% growth with the consequence of acquisition being a myriad of different cultures under the Marshall name.
Phase two, the next five years, will see the company concentrate on maximising the growth opportunity provided by the brand depth and the expanded market area - and what Gupta calls the “people agenda” that will see staff develop, coaching and training receive increased focus.
“We are still in a growth mode. But are we going to grow from £250 million to a billion in turnover, another 400%, in five years? No.
“But we are going to continue to grow. It will be with only existing partners or additional premium or specialist brands.”
“Phase two is making sure we maximise the profit opportunity from the business.”
Robert Marshall, chief executive of Marshall Group, said: “The progress of the motor group has been fantastic over the last five years. We've gone from being largely local to being substantially national and with a better portfolio, better risk profile, better management, better people engagement and better customer satisfaction. It's excellent all round."
> Visit AMi for the AM100 dealer groups by turnover.
> Marshalls' financial health and network details on AMi.
Daksh Gupta talks to AM about the challenges and opportunities in creating a universal culture in Marshall Motor Group in the April issue of AM, published on March 24.
Login to comment
Comments
No comments have been made yet.