Lookers chief hails record-breaking performance

LOOKERS chief executive Peter Jones hailed “another record trading performance” as the Manchester-based car dealer network announced that pre-tax profits more than doubled in 2010 to £31.1m, on sales up 7.7% to £1.9bn.

Chairman Phil White hailed the firm’s performance as it was delivered “against the background of the difficult economic conditions in the UK”.

He added that following the widespread reconstruction of the business which took place two years ago, Lookers had continued to identify which of its businesses were underperforming and seek to either close or sell some of its less profitable dealerships.

“This has resulted in improved overall group performance and a reduction in costs,” he said.

Jones said that both its motor retail and parts had delivered record performance , with the latter now responsible for around 35% of the group’s profits.

“The parts division is of particular importance to the group as it produces a more resilient source of profit which is not subject to the fluctuations in the new and used car markets,” he said.

Its motor division, which contains 119 franchises at 71 sites, increased its pre-tax profits by around £3m. It added six new franchises to existing sites which Jones said had improved their efficiency while also selling or closing seven “non-core” sites.

White said that Lookers was now generating stronger levels of cashflow than in the previous year, which had allowed it to pay down debt. Net debt has been reduced to £56.6m by the year end, compared with £79m a year earlier.

“The group balance sheet has been strengthened significantly over the past two years and this, together with substantial headroom in our bank facilities, enables us to pursue strategic acquisition opportunities in both the motor and parts divisions,” said Jones.

He added that both its motor and its parts division had made a good start to 2011.

“The motor division has continued to outperform the new retail car market and our used car performance has shown further improvements.

“We have a healthy order book for the delivery of new cars in the important month of March and aftersales continue to perform well, with the result that the motor division is ahead of both budget and prior year,” he said.

He added that the parts division was also performing ahead of forecasts, he added.

The firm has also reinstated a progressive scrap dividend that it had been forced to abandon during its restructuring. It is proposing a final dividend of 1.2p, bringing the total dividend for the year to 1.8p.