15 August 2018

Lookers has revealed a drop in adjusted operating profit of 9% as it announced half-year financial results to the end of June 2018. The group said adjusted operating profit for the period was £52.8m and blamed ongoing “challenging market conditions”, increased operating costs and a very strong comparative period last year.

Despite the figures, CEO, Andy Bruce, told investors he was “pleased with our performance over the first half of the year” and said the group is “on course to meet market expectations for the full year”. Group turnover is up by 5% to £2.58bn and pre-tax profit up 2% to £45.7m including a £7.6m windfall from the sale of a property.

The figures are a step back from the full year 2017 when the group was able to announce growth in both revenue and profits despite warning then of a “challenging market”. The group noted the strong performance in the first half of last year was followed by a sharp reduction in demand in the second half.

Mr Bruce said: “We expect the balance of profits to return to a more normal distribution in the current year, where the first half should represent between 60% and 65% of full year profits, as had been the trend for several years before 2017.

“Looking forward, we have an encouraging level of orders for the important month of September. Whilst the new car market has seen further reductions in 2018, the decrease appears to have stabilised and volumes remain at a historically high level.”

The group said new car turnover was stable, with the reduction in volumes less than the overall market decline, but gross profit from new cars decreased by 3%, reflecting a slight reduction in gross margin.

Total group turnover of used cars increased by 12% and gross profit increased by 4% while turnover for aftersales increased by 6% and gross profit increased by 7%.

Mr Bruce repeated an earlier warning from Marshalls that the new WLTP testing regime “has potential to cause some volatility in the supply of new vehicles” but he said the group did not believe it would be a material issue for shareholders.

Tags: Andy Bruce, Financial results, half year 2018, Lookers