Motor retailer Vertu says extraordinary trading conditions means it is likely to see £75m adjusted pre-tax profit when it announces preliminary 2022 results in May.
The Gateshead based group - which includes a network of 159 sales showrooms and aftersales sites - contrasted the performance with £24.6m pre-tax profit in its 2021 financial year.
In an trading update to investors covering the five months to the end of January, Vertu said a limited supply of vehicles had helped to drive up margins and pushed average used care prices up by roughly 25% year-on-year. Gross margins were 46.4% for the period.
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At the same time Vertu announced a £3m share buyback programme funded by the company's own cash resources and following a similar move announced in November last year.
The group's broker Zeus Capital Limited will purchase the ordinary shares. Vertu said its debt capacity, current net cash position and positive cash flow meant it would continue to pay dividends and consider acquisitions.
Chief executive Robert Forrester said: "I am pleased to report that the board now expects the trading result for the year ended February 28 2022, at an adjusted profit before tax level, to be not less than £75m.
"This further upgrade would not have been delivered without a significant team effort and I would like to thank every single one of my colleagues for their hard work and dedication.
"The trading results have been aided by sector tailwinds and limited vehicle supply leading to augmented margins. In addition, recent acquisitions have contributed at a higher level than initially envisaged due in part to a swift and successful integration process."
But Vertu said the strong trading conditions were unlikely to continue into its 2023 financial year and cited "considerable uncertainties" over new vehicle supply and the unknown impact of cost-of-living inflationary rises on consumer confidence.
Despite this, the group said it expected performance to be well ahead of periods prior to this current financial year.
During the period under review, Vertu said its operating expenses had increased by £26.3m compared to pre-pandemic financial year 2020 owing to dealership acquisitions. Between October and December the group held a salary review to drive retention and recruitment of staff, increasing operating costs by £1.6m during the period.
Over the past two years the group has grown its workforce across its Gateshead customer experience centres and its software development and digital marketing teams.
An additional £1.1m in marketing investment during the five month period saw the launch of the "Click2Drive" digital sales brand and take advantage of strong post lockdown consumer demand in sales and service.
