Lookers gearing up for strong end-of-year performance

MANCHESTER car dealership Lookers is celebrating a strong performance in the third quarter of 2015, driven by improvements in all areas its business.

Key to its success was the acquisition of Benfield Motor Group for £87.5m at the beginning of September, a move which added 30 dealerships to the business and which has made a significant contribution to the group’s result in that month.

During the period it also acquired a Jaguar dealership in Amersham and sold its used car supermarkets in Bristol and Burton-on-Trent.

Gross profit from used cars increased by 7% during the period, continuing the growth trend of recent years, with margins being maintained at similar levels.
 
Our aftersales business increased turnover by 8% compared to 2014, benefiting from the growth in the vehicle parc of cars under three years old and increased the gross margin compared to the previous year.
 
Gross profit from aftersales increased by 9% compared to the prior year.

Meanwhile, its independent parts division made good progress in the period with increases in both turnover and profit before tax compared to the prior year, against a background of an improving but competitive market. Operating margins were maintained at a similar level to the prior year, with careful control of overheads resulting in a satisfactory increase in profit before tax.

Whilst the ratio of net debt to EBITDA increased following the Benfield acquisition, it should be well below 1.5 by the end of the year, the company said.

Its bank facilities were renewed and extended at the time of the Benfield acquisition with total facilities of £250m at lower interest rates than the previous facilities and for an extended term.

This continues to provide Lookers with substantial levels of unutilised bank facilities and the group therefore has a significant amount of additional funding capacity.

The company statement said: “The group has produced a strong result for the nine month period with excellent results from both the motor and parts divisions. The balance sheet continues to be strengthened by strong operational cash flow and positive working capital management and we have substantial headroom in our new and increased bank facilities.

“The financial performance of the group in the nine month period builds on what was already a strong comparative in the previous year.
 
“The board is confident that the group should make further progress during the rest of this year and we therefore believe that the results for the year ending December 31 should be in line with current market expectations, which will represent a significant increase over the result for the previous financial year.”