Lookers has pledged to repay £4.1m of furlough cash after posting a record first half year underlying profit of £50.3m.
In a bullish update to the Stock Market this morning the dealer group – which made a £36.5m loss in the same period last year – said it had decided to hand back part of the cash it had received from the government in 2021.
The impressive profit figures include £12.7m of government support, but the group has said it will ‘voluntarily repay’ the furlough cash it was given before the end of this financial year.
The group has seen new car sales increased 45.7 per cent on a like for like basis and has outperformed the UK new car market which grew 39.2 per cent at the same time.
Used car sales increased by 38.3 per cent in the first half of the year and there was an increase in the money the group made from the sales.
Analysts Zeus Capital noted the ‘increased margins’ on used cars and said Lookers had also managed to improve returns ‘across all other divisions’.
In a note to investors, Mike Allen said: ‘Trading in July and August was said to be above expectations, but the repayment of CJRS grants means full year underlying profit before tax guidance remains unchanged.
‘The order book for September and the rest of the year is strong, albeit ongoing supply issues and uncertainty persist. The group will review its position on dividends when releasing the FY21 results.’
Lookers generated £2.15bn of revenue in the period compared with £1.57bn last year.
Underlying profit for Lookers in first half of 2021
In a wave of announcements this morning, Lookers also announced a facelifted board with the appointment of Ian Bull as non-executive chairman. He will take up the post on October 1.
Bull, who is currently a director for Domino’s Pizza and Dunelm, takes over from Phil White.
He was previously CFO at Parkdean Holidays, Ladbrokes and Greene King. He’s also worked from BT, Disney and Whitbread.
Oliver Laird will also join Lookers as CFO on November 15. He was previously with First Direct Bank, Cooperative Insurance and UK General Insurance.
Lookers said it had net cash of £33m in the bank at the end of June as it continues to trade strongly and focus on costs.
And the group intends to resume dividends soon and will review its position when it finalises its 2021 results.
Mark Raban, chief executive, said: ‘We have delivered a record performance in H1 despite significant Covid-19 related disruption.
‘Demand has continued to be strong as we see a sustained preference for car-based travel amongst consumers.
‘We have been able to capture this demand and outperform the market through continued improvements to our omni-channel customer experience which allows customers to purchase cars with us however they wish.
‘The rapid growth of electric vehicles continues apace, and we are well positioned to maximise this exciting growth opportunity alongside our other strategic growth pillars.
‘Whilst we are mindful of various short-term pressures, particularly around supply, with a refreshed board, a restructured business and an enhanced digital proposition, there is much to look forward to.’
Lookers added it was still ‘remaining cautious’ as there are well documented car supply issues and uncertainty around Covid-19.
Lookers has a market cap of £270.3m and shares are trading at 69.1p – up from 34p in February.