Interim Management Statement

RNS Number : 0260H

Lookers PLC

14 May 2014

 

14 May 2014

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 January 2014 to 13 May 2014. Unless otherwise stated, the figures in this statement relate to the quarter ended 31 March 2014.

The company produced an excellent trading performance in the first quarter to 31 March 2014, in particular during the important month of March 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 corresponding period in the prior year. 

The UK new car market increased by 14% in the three months to 31 March, with retail new car sales increasing by 18% and the fleet market improving by 9%. Against this background our motor division delivered another strong performance. We continued to gain market share with group core retail new car sales 25% higher than the previous year, on a like for like basis, with an increase in margin compared to the prior year. Fleet volumes increased by 6%, slightly behind the market in terms of volume but our focus on higher margin business resulted in an increase in fleet margins in the period.

We have made strong progress in increasing used car volumes over the last two years and it is very pleasing to report further growth in used cars where volumes increased by 8% compared to last year, which was a strong comparative. The increase in volume was also accompanied by increased margins. This is a strong performance when viewed against the background of a relatively flat used car market. This highlights our successful focus on used car sourcing, pricing, stock management and continuing increases in sales leads and enquiries generated by the group website, Lookers.co.uk.

The aftersales business increased turnover by 9% on a like for like basis compared to last year as well as increasing the margin, benefitting in part from the growth in the vehicle parc of cars under three years old. This trend should continue due to the increase in the new car market over the last two years. This increase also demonstrates the benefits from our continuing investment in technology and procedures to further improve both customer retention and average sales value per customer 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 our commitment to deliver excellent customer service and an enhanced customer experience, which are key factors in our "customers for life" strategy to strengthen the business and further improve profitability.

As reported, on 10 March 2014 we acquired Colborne Garages Limited ("Colborne") for a total consideration of £33.6 million. Colborne operate three Audi and two Volkswagen dealerships, one Skoda dealership and a Volkswagen commercial vehicle dealership, in Surrey and Hampshire, as well as a Jaguar, Land Rover and a Bentley dealership in Barnet, North London. We are pleased to report that the trading result for Colborne in March was ahead of budget.

Our independent parts division continued to make further progress in the period with increases in both turnover and profits compared to the prior year, against a background of an improving yet competitive market. Turnover improved by 6% compared to the prior year as we continue to grow the business by investing in new and existing product lines. Margins were maintained during the period and careful control of overheads resulted in an increase in profit before tax in line with 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 budget. Working capital continues to be well managed and the movement in the period is favourably ahead of budget. Net debt at 31 March 2014 is at a higher level than last year due to the acquisition of Colborne. However, if net debt is adjusted for the acquisition, then it would be at a level which would be significantly lower than the corresponding period last year. Following the renegotiation and increase in our bank facilities in February this year, we have significant levels of unutilised funding capacity.

Outlook

The group has made a strong start to the year with an excellent result for the first quarter and we continue to outperform what has been a strong new car market. The group has 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 also made good progress with healthy improvements in both turnover and profit before tax.

We have continued to benefit from strong operational cash flow and working capital management, which has strengthened the group balance sheet. We have substantial headroom in our new and increased bank facilities with net debt being closely controlled. This provides financial security as well as funding capacity to help develop the business through further strategic acquisitions in both the motor and parts divisions.

The excellent performance of the group in the four month period represents a further significant improvement in the financial performance of the company and 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, create a positive environment for further growth. We therefore anticipate that the results for the year ending 31 December 2014 will be ahead of current market expectations.  

For further information:

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

 

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