Lookers trades well as refinancing talks continue

CAR dealer Lookers says it is ahead of budget, and has been buoyed by used car sales.

The Manchester-based group said its “encouraging” first quarter performance, which was ahead of expectations, and the first quarter of last year despite the decline in the new car market, had been maintained.

It said this was down to continued strong performance in used car sales and further growth from its aftersales and aftermarket parts distribution businesses.

Ken Surgenor, chief executive, said in a trading statement: “Our diversified business model and market-leading aftersales offering coupled with the cost savings we are realising is enabling us to trade resiliently through a tough market.”

The company added that it is still in advanced talks over its bank facilities, but expects these to conclude shortly.

The company hinted it would look at a rights issue to strengthen its financial position, stating: “Recognising that the new arrangements are likely to be significantly more expensive, as previously announced the board is therefore also considering alternative sources of capital in order to minimise the additional cost of bank borrowings.”

 In April Mr Surgenor had said he hoped the car scrappage scheme, which has proved to be highly successful in other European countries, would benefit the group in terms of new car sales.

But major players Ford and Honda have already caused confusion – delaying their entry to the scheme by ordering their dealers not to register any cars under the scheme, for the time being, until arrangements over VAT, for example, have been resolved with the government.

The group also announced that David Dyson has stepped down as group finance director for personal reasons, and will be replaced with Robin Gregson.

Mr Gregson was previously group finance director of Cardpoint and CD Bramall. Mr Dyson, who has been with the group for 17 years, will act for the company on a consultancy basis to ensure a smooth hand-over.

In the year to December 31, the group made a loss of £14.9m compared to a profit of £23m in 2007. However, revenue rose from £1.68bn to £1.78 on the back of a strong performance from its after-sales and parts businesses.

Last year, the group, which operates 120 retail outlets across 30 franchises in 79 locations, restructured its franchise business.