Vertu Motors chief executive Robert Forrester has said that the group will be considering how it can best "deploy capital" to drive growth in 2018 following a trading update which revealed a new car sales decline of 15.7%.

Delivering an update ahead of its full-year results ended February 28, the group showed declining new and used car sales, the latter falling by 5% over the reported period as revenues fell by 2.4% in total and 0.1% like-for-like.

Vertu reported improved performance in its fleet, commercial and aftersales business, however, with fleet business up 10.7% by volume against an industry 11.8% down and commercial vehicle sales up by 0.3% against an industry down by 4.9%.

Forrester reported that the business’ high-margin aftersales business, meanwhile, had generated like-for-like growth of 3.7%, generating 38.1% of the group’s gross profit.

Forrester said that he was not surprised to see market analysts downgrade their profit predictions for Vertu but said that the group remained “very robust from a balance sheet perspective”, adding that it was well-placed to take advantage of the effects of a challenging market.

He said: “In this environment businesses will be finding it tough. With that pressure comes opportunity for a business in our strong position.

“In the months ahead we are well placed to make tactical acquisitions and we will clearly be looking at how we want to deploy our capital.”

Zeus Capital adjusted its forecast for Vertu’s profit before tax in 2018 to an anticipated £28m (£31.5m previously), going to £25m in 2019 (£27.6m previously) and £29.5m in 2020 (£31.0m previously).

In October, as Vertu recorded a 29.4% increase in profit before taxfor the first half of its financial year (to £24.2m)  Forrester attributed some of the group’s success to a determined cost-cutting exercise which left “no stone unturned”.

In the period since, the group has continued to focus on areas of under-performance in its’ dealership portfolio with its strategy of “Fix, Re-franchise, sell or close”. 

Vertu completed its exit from the Fiat Group business with the closure of Worcester Fiat and Alfa Romeo.  

In addition, in January 2018 the Group disposed of a dealership in Boston which was loss-making, realising an estimated £1.7 million in cash including a freehold property.

Running alongside a share buy-back scheme which has seen the group purchase 9.7 million shares (2.4% of the issued capital) for £4.3m, the strategy has helped the business retain a strong balance sheet.

It reported that it also has in place a five-year banking facility with Barclays Bank plc and The Royal Bank of Scotland plc. 

This acquisition facility provides the group with £40 million of committed borrowing capacity with the potential to add a further £30 million which is currently uncommitted.

Forrester said: “In terms of acquisitions we will look at each potential opportunity on a return on capital investment basis”, suggesting that the group was not seeking exclusivity in a certain area of the market.

In its financial statements, Vertu said that its outlook for the next financial year remained cautious as new car profitability remained under pressure and cost increases continue. 

But Forrester said that the reducing new car registrations in the UK were more to do with the economic pressure on manufacturers than consumers.

He said: “The currency pressure on manufacturers means that they are making less money in the UK. There’s less supply coming in and as a result there are less consumer offers.”