22 August 2023

Lookers has reported a drop in underlying profitability and gross margins in the first half of 2023 following record figures for the past two years. The group’s underlying profit figure was down £1.1 million at £46.1m on a turnover that was up 8.0% at £2.42 billion.

Lookers, which is currently the subject of a takeover bid by Canadian firm Global Auto Holdings, said it was pleased with the results but cited “macroeconomic headwinds” for the falls.

Like-for-like new vehicle sales grew 16.1%, while used unit numbers were up 3.5% and aftersales revenue was up 13.5%. However, overall gross margin was down from 12.6% to 12.2%. The gross margin on new cars dropped to 8.4% from 8.6%, on used this figure was down from 7.3% last year to 6.6% in the first half of 2023 and aftersales gross margin was now at 40.3% down from 41.8%.

Commenting on the results, chief executive Mark Raban said: “We are encouraged by our good H1 performance, particularly the resilience of the group in the face of rapidly increasing interest rates and persistent cost pressures. We maintain a strong new vehicle order bank moving into the second half of 2023 but remain cognisant of continuing macroeconomic pressures.

“The board continues to believe that our business model and the advancement of our strategic priorities place the group at the forefront of integrated automotive retail in the UK. We expect inflationary cost pressures to continue and that the Bank of England base rate will stabilise in the near future. However, the board are confident that the business is well placed to respond to the continued challenging trading environment and maximise the strategic change opportunities ahead.”

Lookers board also repeated its recommendation of the Global Auto Holdings takeover bid at 130p a share and a meeting to approve the offer is scheduled for 5 Septmember.

Highlights

• Revenue up 8.0% at £2,419m (H1 2022 (restated): £2,240m) with all revenue streams delivering growth and reflecting improved vehicle supply.
• Continued focus on cost control with underlying profit before tax broadly in line with last year, despite £6.7m of additional interest expense.
• Like-for-like new unit growth +16.1%, used unit growth +3.5%, aftersales revenues +13.5%.
• Cash generation continues to be strong with net funds of £101.4m as at 30 June 2023 (30 June 2022: £78.5m; 31 December 2022: £66.5m).
• Interim dividend of 1.00p previously declared 17 August 2023, payable on 8 September 2023.
• An all-cash offer of 130p per share from Global Auto Holdings Limited, has been unanimously recommended by the Lookers Board of Directors. The offer is to be effected by a Scheme of Arrangement and meetings to approve the offer have been convened for 5 September 2023.

Tags: Alpha Auto, Lookers