7:43 am, October 18, 2022
Lookers today increased its pre-tax profit expectations for the year to at least £75m – a drop on last year’s £90.1m.
In a trading update to the London Stock Exchange for the third quarter to September 30, the automotive retail and service group also announced a share buyback programme of up to £15m.
In addition, it said it had been appointed by Great Wall Motors as official retailer for its first EV in the UK, under the Ora brand, and had signed a franchise agreement with Lotus to represent it in Northern Ireland as well.
Chief executive Mark Raban said: ‘We have built on the strong first-half trading momentum, particularly in the important month of September with the arrival of a new registration plate.
‘We remain mindful of ongoing supply chain disruption and significant inflationary pressures affecting consumers and businesses alike.
‘However, our intense focus on driving self-help operational efficiencies across the business and ensuring ongoing strong vehicle margin retention means that we are increasing our profit expectations for the full year.
‘I would like to thank all of our stakeholders, particularly my fantastic colleagues across the business, for their tireless efforts in serving Lookers customers to produce these strong results.’
Lookers said it outperformed the UK new market during Q3 by about 5.6 per cent, helped by its omni-channel customer experience strategy. It said the UK market declined by 0.1 per cent.
During September, Lookers’ new retail unit sales were up 11.5 per cent against the UK new retail car market, which grew by 4.6 per cent, with underlying profit before tax for the month in line with last year.
Like-for-like used vehicle sales were down by 7.1 per cent in Q3, which it said was an improvement on the 8.3 per cent decline reported for the first half of the year.
The volume decline was partly offset by ongoing improvements in margin retention and the penetration of finance and ancillary products.
Aftersales revenues remained robust and were ahead of last year on a like-for-like basis, it added.
As of September 30, 2022, the Lookers group had a net cash balance of some £86m versus approximately £33m on the same date last year.
It said the net book value of freehold and leasehold properties of some £297m was a key part of its strong balance sheet and gave extra operational flexibility.
The combined value of its cash and property portfolio as of September 30 was equal to 98p per share, versus 78p as of December 31, 2021.
Announcing the launch of the share buyback programme, the board said it considered that repurchasing shares at the current discount to its cash and property portfolio was an attractive investment opportunity and in line with its capital allocation framework and stated aim to maintain a progressive dividend policy.
The purpose of the programme is to reduce the share capital of the company and increase earnings per share.
Trading with Great Wall and Lotus is expected to begin in the last quarter of this year from existing Lookers properties. Meanwhile, it said talks with other potential new partners were progressing well.
Looking ahead, the board said it was encouraged by the strength of Q3 trading and early start to Q4, and it continued to maintain a strong new car order bank, which was above historical normalised levels.
But it added: ‘Although we are pleased with the recent positive trading performance, the availability of new vehicles continues to be a factor limiting our growth.
‘We are also cautious on how consumer spending might be affected during the remainder of this financial year, with inflation, higher interest rates and wider economic uncertainty.
‘Notwithstanding these factors, given the strength of performance in the period, the board now expects underlying profit before tax for 2022 to be ahead of its previous expectations and to report no less than £75m.’
Zeus Capital had forecast a pre-tax profit of £63m for the year.
