Interim Management Statement

RNS Number : 7886P

Lookers PLC

30 October 2012

 



30 October 2012

Lookers plc

Interim Management Statement

Lookers plc, ("Lookers" "the company" or "the group"), one of the leading UK motor retail and aftersales service groups, is issuing an interim management statement for the period from 1 July 2012 to 29 October 2012.

The company produced an excellent trading performance in the third quarter to 30 September 2012, in particular during the critical month of September, and the Board is very pleased to report a record result for the period under review.

The UK new car market increased by 4% in the nine months to 30 September, with the retail new car market increasing by 9% and the fleet market remaining at last year's level. Against this background our motor division delivered another strong performance. We continued to gain market share with group core retail new car sales 11% higher than the previous year, 2% ahead of the market. Fleet volumes reduced by 18%, the reduction in volume being primarily due to a specific low margin fleet deal in 2011 which was not repeated this year. New retail car margins increased compared to the prior year and fleet margins also increased, more than offsetting the reduction in fleet volume.

Used car volumes for the nine months increased by a very pleasing 12% compared to last year and used car margins also increased. This very positive performance reflects our strong focus on used car pricing, stock management and continued investment in the group's internet and social media marketing strategy.

Despite continued pressure in the sector, the aftersales business in the motor division has maintained turnover on a like for like basis, with a small erosion in the gross margin compared to last year. This demonstrates the success of our continued investment in technology and procedures to improve customer retention and average sales value per customer visit.

As detailed in our interim report for this year, turnover in our independent parts division has been affected by a reduction in non essential maintenance spend and the consequential level of competition in the market. Volumes have been protected by active pricing management and this is demonstrated by increased volumes for the quarter which were higher than the prior year. Gross margins reduced slightly in the period but strong control of overheads helped to reduce the impact on profitability.

Working capital continues to be well managed and benefits from strong operational cashflow. The sale of surplus assets has realised £5.6 million in the nine months to 30 September and we have repaid £3.75 million of bank loans in this period. Net debt is at a higher level than last year due to the acquisitions of Lomond Motors Limited and Fleet Financial (N.I) Limited, which we referred to in our half year report, but our bank facilities continue to have significant levels of unutilised capacity.

Outlook

The motor division has made excellent progress in the period, through increased new retail and used car volumes at improved margins, a strong performance despite the challenging conditions in the motor retail market. There is an excellent opportunity to improve the returns generated by the recently acquired Lomond Audi and Fleet Financial and for these businesses to make a significant contribution to the motor division. Despite suffering from a marginal reduction in turnover, the parts division continues to produce good results, making a significant contribution to group earnings. Product development and marketing initiatives in the first half of the year are having a positive impact in the parts division, with turnover in the third quarter being higher than the prior year and profit being in line with expectations.

The group balance sheet continues to be strengthened by strong operational cashflow, we have substantial headroom in our bank facilities and net debt continues to be closely controlled. This provides financial security for the group as well as providing funding for us to make strategic acquisitions in both the motor and parts divisions, should further opportunities arise.

Whilst economic conditions continue to affect consumer confidence, restricting recovery in the new and used retail sectors, we continue to improve the operational and financial performance of the group. The aftersales bias to the business and our strong performance over the last three years, demonstrates the ability of the group to perform well in a challenging market. We therefore continue to anticipate that the results for the financial year to 31 December 2012 will be in line with management expectations.

For further information:

Lookers plc	Telephone: [phone]
Peter Jones, Chief Executive
Robin Gregson, Finance Director
Tavistock Communications	Telephone:  [phone]
Catriona Valentine/Keeley Clarke

 

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