LOOKERS has suffered a 14 per cent drop in pre-tax profits for the first half of 2018.
The dealer group said it had expected the year-on-year fall in adjusted operating profit before tax from £50.2m to £43.1m as the first half of 2017 was an especially strong comparative period.
However, its unaudited results for the six months to June 30 showed that total turnover was up by five per cent to £2.58bn.
New car turnover was stable, with the reduction in volumes less than the overall market decline. Meanwhile, used car turnover increased by 12 per cent and gross profit was up four per cent. Aftersales turnover increased six per cent, while gross profit was up seven per cent.
The group invested £14m of capital expenditure into improving dealerships, as well as strengthening its portfolio of franchise representation by closing two dealerships and opening one new site.
Lookers believes that the impact of the forthcoming Worldwide Harmonised Light Vehicle Testing Procedure (WLTP), which comes into effect on September 1, has the potential to cause some volatility in the supply of new vehicles.
However, the group said it had seen an ‘encouraging’ level of new car orders for September – a hugely important month for the industry with the 68-plate – and was on course to meet market expectations for the full year.
Chief executive Andy Bruce said: ‘I am pleased with our performance over the first half of the year, which has been delivered despite ongoing challenging market conditions. Although profits, excluding a profit of £7.6m on the sale of a property, are down on last year, as expected, this was due to a very strong comparative period, driven by record new car sales ahead of the decline seen across the market from April 2017.
‘Against this backdrop, we continue to show good strategic momentum, winning market share and outperforming the wider industry, demonstrating the benefits of our clear strategy of having the right brands in the right locations, with a well-invested dealership portfolio combined with excellent execution. We are also benefiting from our scale and our diversified business model, which has resulted in revenue and gross profit growth across both used cars and aftersales.
‘We have an encouraging level of orders for the important month of September. Whilst the new car market has seen further reductions in 2018, the decrease appears to have stabilised and volumes remain at a historically high level. Based on our first-half performance, we expect to meet market expectations for the full year.’