Year End Trading Update

RNS Number : 4557Z

Lookers PLC

14 January 2011

 



                                                                                                                        14 January 2011

Lookers plc

Year end trading update

Lookers plc, one of the leading UK motor retail and aftersales services groups, is today issuing a trading statement ahead of the full year results which are due to be announced on 9 March 2010.

Following a strong trading performance in the first nine months of the year, we are pleased to report that trading during the quarter ended 31 December 2010 has continued to be in excess of both budget and the prior year. Consequently, we expect Group results for the full year to exceed management expectations.

Our market leading independent parts division, which makes a significant contribution to group earnings, has delivered further improvements in profitability and continues to trade ahead of budget and last year.

The motor division has also continued to deliver trading results ahead of budget and prior year and has benefited from new car retail volume sales growth in excess of the UK new car retail market, where we gained market share with like for like sales for the year closing 3.8% ahead of 2009 levels, in a new car retail market that closed the year 5.6% down on 2009. We continue to make further progress in refining our franchise portfolio and have recently sold or closed seven underperforming dealerships to realise cash, which we will invest in new businesses that offer the opportunity of a greater return on capital.

Used car sales volumes delivered good second half year growth, enabling full year volumes to recover to 2009 levels. Aftersales revenue in the motor division continues to show growth on the previous year where the overall market has been declining, with satisfactory margins.

We have continued to focus on the control of working capital and operational cashflow and this, together with cash raised from the sale of underperforming businesses, has reduced bank borrowings and resulted in a corresponding reduction in interest charges. We believe that this benefit, together with the strong operating performance from both divisions and continued review of the cost structure of the business, will deliver a strong result for the year.

Outlook

Both divisions have delivered excellent trading performances in the year and we therefore anticipate that the results for the financial year to 31 December 2010 will be towards the top end of market expectations.

As we start the new financial year, the new and used car retail markets are likely to continue to be affected, as consumer confidence is subject to prevailing conditions in the UK economy. However, the aftersales bias to the motor division and the group's strong performance during the past two years, demonstrate the strength of the business and leave us well positioned for future growth.

Our independent parts distribution business remains a key differentiator for Lookers in the retail motor sector. It provides a hedge against fluctuations in the new and used vehicle markets, as well as making a significant contribution to group profitability.

The group balance sheet has been strengthened significantly over the past two years and this, together with substantial headroom in our bank facilities will enable us to pursue strategic acquisition opportunities in both the motor and parts divisions, which will help underpin growth in future years.

For further information:

Lookers plc	Telephone: [phone]
Peter Jones, Chief Executive
Robin Gregson, Finance Director
Hudson Sandler	Telephone [phone]
Nick Lyon / Kate Hough

 

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