Lookers top line revenue grows despite drop in volume of cars sold
Car retailer Lookers has grown sales income across the business despite lower volumes.
While top line revenue grew to £4,300.9m from 2021’s £4,050.7m this was despite a 5.8% overall reduction in new and used vehicle volumes sold.
Revenue growth was down to a higher average selling price of cars by 12.9%, the supply to the new retail sales channel being prioritised by manufacturers in 2022 and Lookers increasing its used vehicle finance operation.
Profit before tax decreased to £84.4 million (2021: £90.0m, including £9.8m of COVID support), which the board still claim are “extremely strong comparatives from our record performance in 2021.”
Last year Lookers benefited from an unprecedented environment where supply issues strongly drove up margins across both new and used vehicles.
Interim chairman Paul Van der Burgh said the results were “another year of excellent financial results and operational progress” and called the the trading performance “impressive and ahead of the Board’s expectations at the start of the year, despite the well-documented headwinds in our sector.”
He added: “Although we are still operating in a far-from-normal environment, the strong performance in 2022 is a result of Lookers’ outperformance of the new and used car markets in the UK, despite a backdrop of increasing inflationary pressures, including both employment and utility costs.“
The Group now holds property assets with a net book value of approximately £290.5m and net funds of £66.5m, representing 92p per share as at 31 December 2022.
Lookers is also expanding in the Electric Vehicle market.
“Next year, our focus will be on continuing our progress on operational optimisation, and further embedding technology and digitisation across the Group. We have also introduced a formal strategy regarding the utilisation of our expansive property portfolio which will principally focus on operational usage; we hope that this will lead to further value generation for our stakeholders.”
A share buyback programme of up to £15m is also underway to reduce the capital of the company and increase earnings per share. At the year end, Lookers bought back 5.7m shares at an average of 78p per share at a total cost of £4.5m.
Mark Raban, chief executive officer, said: “We have strong momentum in the execution of our strategic priorities. Our operational optimisation agenda remains the cornerstone of our strategy and we have made demonstrable progress on our self-help initiatives. In addition, I am particularly pleased to see the expansion of our offerings through partnerships with a number of exciting new brands and the addition of incremental revenue streams including cosmetic repairs.
“We remain mindful of pressures faced by the consumer and on discretionary spending. However, we are confident in our proposition, our balance sheet and strategic focus, with significant opportunities ahead. With good momentum across the business, we have continued to trade strongly in Q1 2023, and the Board’s outlook for underlying PBT for the current financial year is now ahead of its previous expectations.”