Trading Update

RNS Number : 9839V

Lookers PLC

09 November 2017

 

9 November 2017

LOOKERS plc

TRADING UPDATE

Positive trading in Q3, and on track for the full year

Lookers plc, ("Lookers", "the company" or "the group"), one of the leading UK motor retail and aftersales service groups, issues its trading update for the period ended 30 September 2017.

The company produced a positive trading performance in the third quarter, with a solid result during the important month of September.

New car market

The new car market represents 35% of gross profit for the group. After a strong start to the year, the UK new car market has decreased since April and by the end of September, total UK registrations had reduced by 3.9% compared to the prior year, with a reduction in quarter three of 9%. Industry forecasts by The Society of Motor Manufacturers & Traders (SMMT) for the full year are now at 2.57m, a reduction of 4.7% compared to last year, although this remains historically a very high level of registrations. We are pleased to report that our key manufacturer partners recognise the more difficult trading environment and are taking pragmatic and supportive actions such as reducing targets, increasing tactical incentives and helping us to reduce operating costs which will offset the effect of lower new car volumes going forward.

Against this background, the group has produced encouraging results in the nine months to 30 September:

·     Turnover of new cars increased by 10% (5% on a like for like basis);

·     Total gross profit from new cars increased by 15% (6% on a like for like basis);

·     New car margins and profit per unit for both new retail and fleet cars were higher than the prior year.

Used car market

The used car market continues to be buoyant and values of used cars have remained stable in this period. Used cars contribute 25% of total gross profit and are an important and successful part of our business.

In this market, the group produced the following results in the nine months to 30 September:

·     Turnover of used cars has increased by 24% (14% on a like for like basis);

·     Gross profit from used cars increased during the period with improved margins, resulting in an increase in gross profit of 20% compared to the prior year (12% on a like for like basis);

·     The group's used car volumes continue to benefit from higher volumes of leads generated by the group's website;

·     Further improvements are expected with the launch of our new website at the start of next year to achieve improved functionality, customer experience and interaction with our customers.

Aftersales

Our higher margin aftersales business, which represents 40% of total gross profit, has performed well in the period and during the nine months to 30 September has seen:

·     Turnover of aftersales  up by 11% (4% on a like for like basis);

·     Gross profit up by 15% (6% on a like-for-like basis) at better margin;

·     Increased profitability, benefiting from the growth in the vehicle parc of cars under three years old and the initiatives we have made to enhance financial performance from aftersales.

Summary and Outlook

The group has had a positive financial performance for the first nine months of the year, against strong prior year comparatives. We have a strong balance sheet which continues to be supported by operational cash flow and our level of net debt to EBITDA has improved. We also have substantial headroom in our bank facilities which gives us flexibility and capacity to develop the business through further acquisitions at a time when there are significant consolidation opportunities within the sector.

In light of the softening in the new car market since April, as various factors impact on consumer confidence, we continue to plan prudently for the business. However, based on the progress seen in the year to date, the board is confident that the group will make further progress during the remainder of this year and believes that the results for the year ending 31 December 2017 will be in line with management's current expectations.

Share buyback

We will be announcing a share buyback programme as this provides sensible returns at the current share price. The buyback will be subject to certain pricing, liquidity and quantum parameters, one of which will be that shares will only be bought back below a pre-determined share price level.

ENDS

Enquiries

Lookers	Tel: [phone]
Andy Bruce, Chief Executive
Robin Gregson, Chief Financial Officer
MHP Communications	Tel: [phone]
Tim Rowntree	Email: [e-mail]
Simon Hockridge

 

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