Automotive retailer Vertu Motors posted a drop in full-year pre-tax profit on Wednesday amid a tougher trading environment.
In the year to 28 February, adjusted pre-tax profit fell 9.2% to £28.6m, with group revenue down 0.9% to £2.8bn.
New retail vehicle volumes fell 14.7% in the period, while used car volumes were down 2.2%. New retail and motability revenues were down 8%, but used vehicle revenues rose 3% and service revenues were up 3.5%.
The group said trading in March and April was in line with management's expectations, with used car volumes up on year-on-year, giving it confidence about the prospects for the year ahead.
Vertu said it had net cash of £19.3m versus £21m in 2017.
Chief executive Robert Forrester said: "We have closed what turned out to be a more challenging year for the sector, with the business in a strong position. We have been deliberately cautious on the acquisition front as pricing moved away from our investment valuation metrics. This trend is beginning to reverse and potential acquisition opportunities are increasing. Our strong balance sheet with net cash of £19.3m, together with our unutilised debt facilities, provides scope for further scaling-up of the business to drive value and further enhance shareholder returns.
"We are pleased with the performance of the group in March and April in all key areas. The board therefore has confidence for the full year."
Canaccord Genuity, which rates the stock at 'buy', said underlying pre-tax profit was "bang in line" with expectations that were rebased in January, while net cash of £19.3m was better than its forecast for net debt of £3.9m, with a £5m benefit from capex phasing and a working capital outflow around £18m lower than expected.
"Year-to-date profitability is still behind last year, but the trends are encouraging and comparatives for the remainder of the year ease," the brokerage said, keeping its FY19E pre-tax profit estimate of £26.6m.
However, it moved from a year-end net debt forecast of £7m to net cash of £17m, reflecting the better FY18 position.
At 1105 BST, the shares
were down 0.5% to 49.65p.