7:53 am, August 24, 2022
Lookers saw its pre-tax profit dip to just below £50m during the first half of 2022.
Its results for the six months to June 30, released at 7am today on the London Stock Exchange, show it made £49.9m versus £50.4m over the same period in 2021 – a drop of one per cent.
Meanwhile, revenue rose by 3.6 per cent from £2.153.2m to £2.23m, which it said was driven by increases in used vehicles and aftersales, while outperforming the UK new car market by 1.7 per cent.
Its underlying profit before tax figure of £47.2m was down 5.6 per cent on 2021’s ‘exceptionally strong’ £50m, which the car dealership chain said had benefited from £12.7m of government support – comprising £4.1m in furlough, £6.7m of business rates relief and £1.9m of site-specific local recovery grants – and in spite of rising employment and utility costs.
It shifted 41,257 new cars and 42,543 used over the six months – down 18.6 per cent and 8.3 per cent respectively.
Lookers said the shortage of new vehicles had had a knock-on effect on the availability of used vehicles, although the success of its Click & Sell direct-to-consumer car buying initiative had helped.
Used car prices at Lookers rose by 27 per cent thanks to the shortage of semiconductors pushing up demand for vehicles.
Aftersales revenue increased from £211.3m to £230.1m – a rise of 8.9 per cent.
In a first-half update issued in June, it reported ‘strong’ trading in the first half of 2022, but warned of ‘challenges’ later this year.
Chief executive Mark Raban said today: ‘Our first half financial performance was very strong, against an exceptional comparative period, despite ongoing inflationary pressure and vehicle supply disruption.
‘We have also made excellent progress with our strategic priorities.
‘We remain focused on our customers and improving our proposition to ensure the process of buying or leasing a car is as easy and simple as possible, particularly in the current challenging economic environment.
‘Notably, our recent You Choose brand campaign highlighted the progress we have made in our omnichannel capabilities.
‘We are focused on operational and “self-help” efficiencies across the business. At the same time, we continue to pursue a number of exciting growth opportunities.
‘Whilst mindful of the pressures facing consumers, we are confident in our strategic direction and retain our expectations for the remainder of the year.
‘Finally, I would like to thank all our stakeholders and particularly my fantastic colleagues across the business for their support and dedication.’
The interim management report said good progress had been made in standardising its call centre and inquiry management systems, which in turn had driven lead conversion rates to improve by one per cent year on year.
Support received via the furlough and local recovery grants schemes were subsequently repaid.
As of June 30, 2022, the group had committed to repay the £1.5m of business rates relief received in the first half of the year, so the cost of repayment, alongside the benefit received, is included within today’s results.
An interim dividend of 1.00p per ordinary share will be paid to investors on November 25.
Trading during July and August has been in line with expectations, it said, adding that the group remained positioned well to deliver on its strategic priorities for the rest of 2022 and beyond.
Following the release of the results, analysts at Zeus Capital said their financial forecasts of £63m pre-tax profit and £4.198bn revenue for the year remained unchanged
They added that they continued to believe that Lookers’ shares were ‘materially undervalued’ and should be 120p each – they’re currently 79.66p
Lookers also announced today that Sue Farr will join the board as a non-executive director on September 1. She will chair the remuneration committee and will join the audit and risk plus nomination committees.
She replaces Victoria Mitchell, who has been interim chairperson of the remuneration committee pending a permanent appointment, and brings with her more than 10 years’ experience as a non-executive director, with remuneration experience.
Farr also has experience in marketing, branding and consumer issues from the BBC and Chime Group, along with automotive experience at General Motors Vauxhall.
Lookers chairman Ian Bull said: ‘We are delighted that Sue is joining the Lookers board.
‘Her extensive and relevant experience will be a valuable addition to our board in the next phase of our journey to become the UK’s leading integrated automotive retail and services group.’
Farr commented: ‘I am excited to be joining the board of Lookers at a transformative time for the business and the industry as a whole.’
