Trading Update

RNS Number : 0356O

Lookers PLC

15 May 2018

 

15 May 2018

LOOKERS plc

TRADING UPDATE

Outperformance in new car market and continued momentum in used and aftersales

Lookers plc, ("Lookers" or "the group"), one of the leading UK motor retail and aftersales service groups, issues a trading update for its first quarter, covering the three months ended 31 March 2018 ("the period").

Overall, trading performance in the quarter was positive with a strong result during the important month of March.

New car market

The new car market represents 33% of gross profit for the group. Whilst new car registrations reduced by 12.4% to 718,489 cars in the first quarter, industry forecasts by The Society of Motor Manufacturers & Traders (SMMT) for the full year are now at 2.4m. Whilst this is a reduction of 5.6% compared to last year, it remains a very high level of registrations compared to historical levels.

Against this background, the group has produced resilient results in the three months to 31 March:

·     Turnover of new cars decreased by 4%, significantly better than the total market reduction of 12%, and against very strong comparatives;

·     Total gross profit from new cars reduced by 8% with a modest reduction in profit per unit.

The comparative period of 2017 was particularly strong due to the changes in Vehicle Excise Duty on 1 April of that year, which significantly increased volumes in the first quarter.

Used car market

The used car market continues to be buoyant and values of used cars have remained stable in this period. Used cars now contribute 26% of total gross profit.

In this market, the group produced the following results in the period:

·     Turnover of used cars increased by 8%;

·     Gross profit from used cars improved during the period with a small increase in profit per unit, resulting in an increase of 6% compared to the prior year.

Aftersales

Our higher margin aftersales business, which represents 41% of total gross profit, has performed well in the period and has seen:

·     Turnover of aftersales was slightly higher than the prior year;

·     Gross profit increased by 2% at a higher margin.

Cash flow

During the period we sold two properties under sale and leaseback contracts with sale proceeds of £30m. This has had a positive and beneficial impact on cash flow in the period as well as helping to fund our capital expenditure programme.

Summary and Outlook

The group has produced a positive financial performance for the first quarter of the year, against very strong prior year comparatives for the new car market and in an ongoing environment of subdued consumer confidence.  There continues to be strong momentum in both our used car and aftersales businesses, demonstrating the resilience and diversity of the group's business model.

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.

The financial performance of the group in the period demonstrates the effectiveness of our strategy of having the right brands in the right locations. The trading performance since March has been encouraging and we expect to make further positive progress during the year.

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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