Lookers increased its full-year profit expectations to £75 million and kicked-off a £15m share buyback programnme after reporting strong performance in a Q3 trading update.
The AM100 PLC stated that its new car sales volumes had outperformed the market by 5.6% during the three-month period to September 30, with retail unit sales up 11.5% against the wider UK market in September and underlying profit before tax for the month in line with last year.
Like-for-like used unit sales were down 7.1% – an improvement on the-8.3% decline reported in H1 – but gross margins remained “broadly in line with those reported in the first half”, the group said.
Aftersales revenues remained “robust” and were ahead of last year on a like-for-like basis.
Commenting on the group’s Q3 result and a projected full-year performance which would leave the group 16.8% down on a record 2021, despite “significant cost inflationary pressures”, Lookers chief executive Mark Raban said: “We have built on the strong first half trading momentum, particularly in the important month of September with the arrival of a new registration plate.
“We remain mindful of ongoing supply chain disruption and significant inflationary pressures affecting consumers and businesses alike.
“However, our intense focus on driving self-help operational efficiencies across the business and ensuring ongoing strong vehicle margin retention means that we are increasing our profit expectations for the full year.”
Raban, the AM Awards 2022’s Business Leader of the Year, added: “I would like to thank all of our stakeholders, particularly my fantastic colleagues across the business, for their tireless efforts in serving Lookers customers to produce these strong results.”
The Lookers board celebrated the signing of new franchise agreements with both Great Wall Motors’ Ora electric vehicle (EV) brand and Lotus Cars during Q3.
It will represent Ora in Wolverhampton and Braintree and has secured a Lotus franchise for Northern Ireland, with all operations set to commence trading from existing group facilities during Q4.
The group said that its financial strategy would aim to maintain a good balance of investing in the business and shareholder distributions, while maintaining a leverage ratio of 0.5x Net Debt/EBITDA.
Lookers had a net cash balance of circa £86m at the end of Q3, compared to net cash of circa £33m a year earlier, with a net book value of freehold and leasehold properties of circa £297m.
The combined value of Lookers’ cash and property portfolio is now equivalent to 98p per share (31 December 2021: 78p).
Today’s launch of a share buyback programme aims to reduce the share capital of the company and increase earnings per share, it said.
Delivering its outlook for the remainder of 2022 trading, the Lookers board said it was “encouraged by the strength of trading in Q3 and the early start to Q4”, adding that it would “continue to maintain a strong new car order bank, which is above historical normalised levels”.
Highlighting the ongoing economic uncertainty and inflationary pressures impacting consumers, it added: “Although we are pleased with the recent positive trading performance, the availability of new vehicles continues to be a factor limiting our growth.
“We are also cautious on how consumer spending might be affected during the remainder of this financial year, with inflation, higher interest rates and wider economic uncertainty.
“Notwithstanding these factors, given the strength of performance in the period, the board now expects underlying profit before tax for 2022 to be ahead of its previous expectations and to report no less than £75m.”