Lookers has reported ‘strong’ trading in the first half of 2022, but has warned of ‘challenges’ later this year.
In an H1 update issued to the London Stock Exchange this morning (June 29), the listed dealer group said it was trading ahead of expectations and that underlying profit before tax for H1 should top £45m – down from the £50.3m achieved in the same period in 2021.
Lookers said that ‘momentum’ seen in 2021 has continued into the first half of 2022, and that it had performed ‘broadly in line’ with the total new car market’s 8.7 per cent fall but had ‘outperformed’ the market in the brands it represents.
In used cars, volumes declined by 8.1 per cent, but margins in both new and used held firm due to supply shortages.
Aftersales, meanwhile, ‘remained resilient’ and showed ‘good growth’.
Despite the strong performance, the dealer group did counter the second half of the year could be different.
The update said the Lookers board predicts 2022 will be ‘substantially H1 weighted’, but reaffirmed profit before tax would still be ahead of expectations.
CEO Mark Raban said: ‘Following a record year in 2021 we have maintained strong trading momentum whilst continuing to make progress with our key strategic initiatives.
‘I would like to thank all my Lookers colleagues, our customers and our brand partners for their patience and understanding during these uncertain trading conditions.’
He added: ‘There is no doubt that challenges lie ahead but with continued operational optimisation Lookers is extremely well positioned to continue to maximise its multiple growth opportunities.’
Analysts Zeus Capital said: ‘H1 2022 underlying profit before tax (PBT) is expected to be c. £45m and management anticipate full year PBT will also be ahead of prior expectations.
‘We therefore increase our FY22 underlying PBT forecast by 18.7 per cent to £63m, with the view that profits will be heavily H1-weighted this year because of the intensifying squeeze on UK consumer spending power.’
So far this year Lookers completed the sale and leaseback of its Volkswagen dealership in Battersea, London, and seen a fifth of its shares purchased by Cinch owner Constellation.
The latest trading update comes nearly four months after Lookers posted a record 2021 performance.
Underlying pre-tax profits soared by 558 per cent to £90.1m last year, mainly thanks to strong used car margins.