Interim Management Statement

RNS Number : 6914R

Lookers PLC

30 October 2013

 

30 October 2013

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 2013 to 29 October 2013.

The company produced an excellent trading performance in the third quarter to 30 September 2013, in particular during the critical month of September and the Board is very pleased to yet again report a record result for the period. These strong results were both ahead of budget and a significant improvement on the equivalent period in the prior year. 

The UK new car market increased by 11% in the nine months to 30 September, with the retail new car market increasing by 17% and the fleet market increasing by 6%. Against this background our motor division delivered another strong performance. We continued to gain market share with group core retail new car sales 19% higher than the previous year, 2% ahead of the market, with an increase in margin compared to the prior year. Our fleet volumes reduced by 6%, as we continue to improve the quality of our fleet business and avoid low profit transactions. However, fleet margins also increased, more than offsetting the reduction in gross profit from the lower fleet sales volumes.

Used car volumes for the nine months increased by an excellent 20% compared to last year, which was in itself a strong performance and used car margins also increased. This very positive performance is against the background of a relatively flat used car market and reflects our strong focus on used car pricing, stock management and continuing increase in sales opportunities being generated by the group website, Lookers.co.uk.

The aftersales business in the motor division increased turnover compared to last year and it is also pleasing to report that the margin increased during the period as well. This is a positive result which demonstrates the benefits from our continuing initiatives in using electronic vehicle health checks which offer an improved and broader service to our customers whilst also increasing customer spend per visit. It is also a reflection of our continued focus on increasing customer retention through the sale of service plans, where customers commit to longer term contracts for vehicle servicing. We have also continued to pursue our commitment to enhance customer service and our "customers for life" strategy which will deliver further improvements in customer retention, to strengthen the business and further improve profitability.

As detailed in our interim report, our parts division has returned to growth this year with both turnover and profits increasing compared to the prior year, against a background of an improving yet competitive market. Turnover increased by 5% compared to the prior year as a result of continued investment in existing and new product lines. Whilst the increased volume was accompanied by a modest reduction in margin, strong control of overheads resulted in an increase in profit before tax ahead of the growth in turnover.

Cash flow continued to be strong during the period and is significantly higher at both the operational and net cash flow levels compared to the prior year. Working capital continues to be well managed and the movement in the period is favourably ahead of both budget and the prior year. The sale of surplus assets has realised £12.4 million and we have repaid £3.75 million of bank loans in the period. Net debt is at a lower level than last year despite the acquisition of the Shields and Chipperfield Land Rover businesses and our bank facilities continue to have significant levels of unutilised capacity.

Outlook

The UK new car market is clearly benefitting from a welcome recovery after several years of relatively low but stable sales volumes and our motor division has produced an outstanding result in the 10 month period to the end of October. We have benefitted from a significant increase in volumes of both new retail and used cars as well as improving margins in both sectors. The parts division has continued to make a good recovery with healthy improvements in both turnover and profit before tax.

We have continued to benefit from strong operational cash flow, which has strengthened the group balance sheet and we have substantial headroom in our bank facilities. Working capital and net debt continue to be closely controlled with the level of net debt being significantly below the prior year. This provides funding capacity and improved financial security for the group to help develop the business through strategic acquisitions in both the motor and parts divisions.

The excellent performance of the group in the ten month period represents a further significant improvement in the financial performance of the company, which builds on what was already a strong performance in the previous year. This, together with the broad base of our franchise representation, the aftersales bias to the business and further recovery in the UK new car market, provide a positive environment for further growth. We are therefore confident that the results for the financial year to 31 December 2013 will be significantly ahead of current market expectations, providing an excellent base to continue to grow the business in 2014.

For further information:

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

 

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