7:57 am, April 6, 2022
Dealer group Lookers enjoyed a massive 558 per cent rise in underlying pre-tax profit to £90.1m last year, mainly thanks to strong used car margins.
Its results for the year ended December 31, 2021, which were released to the London Stock Exchange today (Apr 6) and beat analysts’ expectations, also show that revenue rose by more than nine per cent to £4.05bn.
Gross profit margin at the Car Dealer Top 100 company increased to 12.8 per cent versus 2020’s 11.1 per cent. Statutory profit before tax, meanwhile, went from £1.5m to £90m.
Chief executive Mark Raban said: ‘2021 was a record year for Lookers. We navigated another year of limited new vehicle supply and Covid-19 disruption.
‘We have reported excellent profits and cash generation, through strong used car margins, continued focus on costs and the unstinting efforts of our people.
‘We have successfully moved back to a net funds position in the business and have a strong balance sheet, underpinned by our property assets, supporting our investment capacity to grow the business.’
He added: ‘The business and our customers face some uncertainties in 2022. New vehicle supply remains very tight. The current crisis in Ukraine and significant cost of living increases will put pressure on consumer sentiment and disposable incomes.
‘However, the group is looking forward to the future with confidence.
Lookers’ Audi showroom in Glasgow
‘It has emerged from the challenges of the past couple of years stronger and with a clear strategy to navigate future challenges and drive value for all our stakeholders.’
The underlying pre-tax profit figure was 5.3 per cent above the £86.2m forecast by Zeus Capital, which said it held on to its view that Lookers remained significantly undervalued as did the rest of the sector.
Lookers made 83,000 sales in 2021, giving it a market share of just over one per cent.
It said it expected to expand its omni-channel proposition and will add to its 11 multi-franchise standalone used car centres.
Two ‘Lookers Cube Concept’ multi-franchise used car centre anchor sites of some five acres apiece will be added to its portfolio in 2022 and 2023.
Looking ahead, Lookers said in its statement that the ongoing semiconductor shortage would likely see new car supplies constrained for the rest of 2022.
It added: ‘Headwinds caused by high levels of inflation in areas such as utilities, mean the group will experience material cost increases.
‘Wider inflationary pressures and the macro-economic impacts of the crisis in the Ukraine add significant uncertainty to the trading conditions faced by the group.
‘Notwithstanding these uncertainties, the board remains confident about the outlook, and that the group is well placed for the remainder of 2022.’
In September 2021, Lookers repaid £4.1m of furlough claims relating to the first half of the year, and said it committed not to make any further claims from July onwards.
It says it will also look to repay £1.9m of non-essential retail sector Covid-19 grants received during 2021 in 2022.
The company will return to paying dividends this year, and is proposing a final dividend of 2.5p per share to be paid in June 2022.
New chairman Ian Bull said: ‘Having navigated a difficult year, I believe that Lookers is now at an exciting inflection point, able to look to the future having tackled many of the issues of the past and emerging as a stronger and more agile business.
‘We are now well placed to prosper in an industry which is undergoing fundamental and exciting changes in the face of evolving consumer trends.’
He added: ‘The whole Lookers team deserves credit and the board’s wholehearted thanks for delivering these results and adapting to tough conditions.’
Bull also made reference to the purchase of nearly a fifth of the company’s shares by Cinch owner Constellation earlier this year, saying: ‘In January the board was delighted to welcome Constellation Automotive Group as a significant shareholder in the group.
‘Their investment endorses the board’s view that the group has excellent prospects and is significantly undervalued.
‘The 19.9 per cent holding was purchased from Tony Bramall and family, who remain shareholders in the group, and the board would like to thank Tony for his years of service as a director and for his support for Lookers.’
Taggarts, which operates in Scotland, is a trading name of Lookers
In a separate statement this morning, Lookers also announced the appointment of Deborah Sherry as a non-executive director effective from today, joining the audit and risk, remuneration and nomination committees.
She was most recently an executive director in the role of chief commercial officer at Future plc and has held senior technology and commercial roles at France Telecom, Google, GE and Amazon, with Lookers hailing her as ‘a highly experienced technology and digital specialist’.
Sherry said: ‘I’m excited to be joining the Lookers Board at a hugely transformative time for the business.
‘With a fresh strategy, record results and a very bright future, Lookers has a tremendous opportunity to strengthen its leadership role in the market.
‘I’m committed to help the organisation take advantage of the opportunities available to it with regards technology, digitalisation and innovation.’
