Car dealer Lookers counts cost of economic headwinds in half-year results

  • Revenue rose by eight per cent in H1 2023 thanks to stronger new car supply
  • Profits slipped marginally, however, latest accounts show
  • Sales of new and used cars were up during the period
  • Lookers is currently a takeover target for Global Auto Holdings

Time 8:07 am, August 22, 2023

Under-offer dealer group Lookers is counting the cost of tough economic headwinds, its half-year results show.

Results for the six months ended June 30, 2023, posted on the London Stock Exchange this morning (Aug 22) show revenue was up, while profit before tax slipped marginally.

The listed dealer group – which is set to be removed from the market by Global Auto Holdings – said improved new car supply helped boost revenue by eight per cent to £2.42bn.

Underlying profit before tax dipped from £47.2m in H1 2022 to £46.1m, with Lookers giving a positive spin on this result, remarking the figure was ‘broadly in line with last year, despite £6.7m of additional interest expense’.

Shareholders will receive a 1p dividend per share – the same figure compared to a year ago – on September 8.

New car sales rose by 16.1 per cent to 37,743 units during the first half, and used cars soared by 3.5 per cent to 43,579 units. Gross margin on second-hand cars, though, slipped from 7.3 per cent a year ago to 6.6 per cent.

Aftersales revenues, meanwhile, jumped by 13.5 per cent.

During the six months, Lookers begun a new relationship with Lotus and Cupra through its Charles Hurst division in Belfast.

It opened three GWM Ora sites in Wolverhampton, Belfast, and Braintree, and agreed three sites with Electric Brands to retail their XBUS and Evetta brands.

Lookers also acquired Chelmsford-based Waterhouse Cars in May 2023, taking its Volvo representation to five sites.

The company also noted it is continuing to ‘harmonise’ the agency sales model for ‘both our customers and colleagues as advancements in the process become available’.

Its Mercedes-Benz and Volvo dealerships switched to agency sales this year.

For its used cars operations, Lookers said it expects to open its first standalone multi-franchise CarHub in Middlesbrough in Q4 2023. It’s also on the lookout for further sites to develop more CarHubs.

Dominating headlines for the past few months, however, has been attempts to pluck Lookers off the London markets.

Canadian car dealer Alpha Auto Group – through a bidding vehicle called Global Auto Holdings Limited – first tabled an offer of £465m or 120p per share to purchase Lookers in June.

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However the largest majority shareholder, Cinch, blocked the move, leading to Global Auto Holdings to table a revised offer of £504.2m or 130p per share which Cinch has agreed to.

That latest offer is set to go ahead and is being unanimously recommended, said Lookers CEO Mark Raban.

In the half-year results, Raban said: ‘The board unanimously recommends the cash offer for Lookers by Global Auto Holdings Limited at 130p per share, which represents a premium of approximately 61 per cent.

‘The board believes that the offer is in the best interests of all shareholders and provides an opportunity to crystallise, in cash, the value of their investments.’

Commenting on the half-year performance, the Lookers boss said: ‘We are encouraged by our good H1 performance, particularly the resilience of the group in the face of rapidly increasing interest rates and persistent cost pressures.

‘We maintain a strong new vehicle order bank moving into the second half of 2023 but remain cognisant of continuing macroeconomic pressures.’

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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