Car dealership reports slump in half year pre-tax profits
Motor dealership Lookers’ profit warning last month was proved correct today as its half-year pre-tax profits fell by almost 40%.
The Altrincham-based group, which operates 165 franchised dealerships representing 31 manufacturers from 110 locations, issued a profit warning early last month, blaming uncertain market conditions and a decline in the new car market.
Publishing its interim results today, the group revealed it had made a 2.7% improvement in sales for the six months to June 30, with turnover rising from £2.576bn to £2.646bn, but pre-tax profits slumped by 39.7% to £24.9m, while underlying pre-tax profits fell by 27.5% to £29.2m.
Shareholders will receive the same dividend as last year, at 1.48p per share.
The group said it had continued to outperform the UK new car market, with new car unit like-for-like sales down -1.2% versus a UK market decline of -3.4%.
It reported a resilient aftersales performance with like-for-like revenue growth of 6.2%, and said it has a strong balance sheet with net debt of £73.9m, compared with £54.5m at the same time last year, but down from £86.9m at December 31. 2018.
Lookers also reported a one-off investment of around £10m linked to restructure and strengthening of regulated activities, which it said will create a stable platform for future growth and an enhanced customer experience. It said the remediation plan is well under way.
In June, shares in Lookers fell by almost a quarter after it revealed it was to be investigated by the Financial Conduct Authority over its sales practices.
The following month,its chief financial officer, Robin Gregson, announced he was stepping down after 10 years in the role.
Mark Raban was appointed to the board as chief financial officer on July 15. He has nearly 30 years of multi-channel retail experience and was most recently CFO at Marshall Motor Holdings plc for four years.
Chief executive Andy Bruce said today: “Our performance for the first half reflects an ongoing backdrop of challenging UK market conditions for the sector.
“Whilst we are reporting lower profits year-on-year, we have made good progress on a number of strategic initiatives and have a clear investment plan to restructure and strengthen our regulated activities.
“Our balance sheet remains strong, including our valuable property portfolio.
“Working closely with our brand partners I am confident in the long-term prospects for the business.
“The board’s current outlook for the full year at the underlying profit before tax level remains unchanged.”