Lookers profit to halve as wheels come off car sales
NORTH West car dealership group Lookers said today it was continuing to be hit by the recession as it axed its full-year dividend and said profits would be less than half of last year’s £24.5m.
In a trading update ahead of its December 31 year end, Lookers, which is based in Stretford, Manchester said it expects profits for year to be “not less than £10m” and blamed the tough market conditions for the decision to axe the dividend.
The predicted profit figure was below City analysts’ forecasts of a figure of £15.6m to £18m.
Lookers said it continues to take costs out of the business and by the end of the month will have closed 21 sites at a cost of £12m. This, and other cutbacks will generate annual savings of around £7.5m, the company said.
In October Ken Surgenor, the company’s chief executive said the market conditions were “as bad as I have seen.”
Today’s trading update said they had worsened since then: “As has been widely reported the new car market has experienced an increasingly challenging sales environment.
“This has resulted in significant reductions in national sales volumes – 23% in October and 37% in November.”
Lookers, which operates more than 100 showrooms nationwide, said that while used car volumes are behind last year, it was now starting to see an increase in both volumes and margins in this market sector.
On a more positive note the group said that thanks to the strong performance of its parts distribution business and after sales arm, it was “in a good position” to meet the challenging market place.
