Record year drives automotive group Lookers

Altrincham-based car dealership group Lookers posted record annual results for the year to December 31, 2021, today.

Sales rose from £3.67bn in 2020 to £4.05bn. Pre-tax profits soared from £1.5m the previous year to £90m. The group finished the year with net funds of £3m compared with a net debt of £40.7m in 2020.

The board has returned to paying a final dividend and is proposing a payment of 2.5 pence per share.

A shortage of computer chips has restricted the supply of new vehicles, but Lookers said its profits surge was largely driven by used vehicle margins.

Lookers said that, with 83,000 sales in 2021, its used vehicles market share is just over one per cent. It is proposing to expand this sector going forward and will add to its 11 multi-franchise standalone used car centres. Two five acre ‘Lookers Cube Concept’ multi-franchise used car centre anchor sites will be added to its portfolio in 2022 and 2023.

The group is also planning the development of aftersales revenue streams and will drive significant earnings opportunities in the growing cosmetic repair market. It plans to achieve this through the roll out of new static and mobile cosmetic repair facilities to around 50 of its existing sites, starting in 2022 and which will be complete by the middle of 2023.

And Lookers will integrate its three leasing businesses as one operating unit and create a single, multi-product offering to its corporate customers. These currently have a combined fleet size of approximately 12,000 units which the group aims to grow substantially by 2024.

Chief executive, Mark Raban, said: “2021 was a record year for Lookers.

“We navigated another year of limited new vehicle supply and COVID-19 disruption.

“We have reported excellent profits and cash generation, through strong used car margins, continued focus on costs and the unstinting efforts of our people.

“We have successfully moved back to a net funds position in the business and have a strong balance sheet, underpinned by our property assets, supporting our investment capacity to grow the business.

“The business and our customers face some uncertainties in 2022. Trading in Q1 has been strong despite new vehicle supply remaining tight. The current crisis in Ukraine and significant cost of living increases will put pressure on consumer sentiment and disposable incomes.

“However, the group is looking forward to the future with confidence. It has emerged from the challenges of the past couple of years stronger and with a clear strategy to navigate future challenges and drive value for all our stakeholders.”

Last month the group completed a sale and leaseback of its property at York Road, Battersea, which generated cash proceeds of £28m before costs, resulting in a gain on sale of circa £6m. Lookers has signed a 20-year lease on the property which is occupied by its Volkswagen Battersea franchise. The group now holds property assets with a net book value of around £290m (74p per share).

Lookers said the momentum of last year has continued into trading in the first quarter of 2022. Robust consumer demand and supply constraints on both new and used vehicles have seen gross margins being maintained at 2021 levels.

This, combined with a tight control on costs, sees the business ahead of 2021 on an underlying profit basis.

However, it said the ongoing semiconductor shortage is likely to see new car supplies constrained for the remainder of 2022.

And headwinds caused by high levels of inflation in areas such as utilities, mean the group will experience material cost increases. Wider inflationary pressures and the macro-economic impacts of the crisis in the Ukraine add significant uncertainty to the trading conditions faced by the group.

But it said, notwithstanding these uncertainties, the board remains confident about the outlook, and that the group is well placed for the remainder of 2022.

The group also announced the appointment of Deborah Sherry to the board as a non-executive director. She will join the board on April 6, 2022 and will be a member of the audit and risk, remuneration and nomination committees.

Deborah is a highly experienced technology and digital specialist, having held senior executive positions at leading technology companies around the world for more than 20 years. Deborah’s career has included senior technology and commercial roles at France Telecom, Google, GE and Amazon with direct exposure to OEM and industrial clients. Most recently, until January 2022, Deborah was an executive director in the role of chief commercial officer at Future PLC.

Lookers chair, Ian Bull, said: “We are absolutely thrilled that Deborah is joining the Lookers board. Her experience and knowledge on technology, digital and commercial issues will really assist in the next phase of our strategy to become the UK’s leading integrated automotive retail and services group.

“Deborah’s in-depth understanding of how the use of technology along with transformation projects can enhance and strengthen our relationship with customers and partners will be invaluable as we continue our investment and focus in this area.”

Deborah Sherry said: “I’m excited to be joining the Lookers board at a hugely transformative time for the business. With a fresh strategy, record results and a very bright future, Lookers has a tremendous opportunity to strengthen its leadership role in the market and I’m committed to help the organisation take advantage of the opportunities available to it with regards technology, digitalisation and innovation.”