Lookers posts +5% turnover for H1, but operating profit slides

Lookers plc has published its trading figures for H1 2018.

Top line numbers show that the group had turnover of £2.58bn for the H1 period, a 5% increase over the same period in 2017.

This resulted in profit before tax of £45.7m, up from £44.6m in H1 2017 (+2%).

Adjusted operating profit (profit before amortisation of intangible assets, etc.) was down from £58.1m to £52.8m (-9%).

Looking at operational highlights, the group noted that turnover was stable. While there was a reduction in overall volumes, it was less than the overall market decline seen in the UK.

The group reported ‘encouraging’ order levels for September, when the new ’68’ plates will be issued. On the flip side of that, there is some expectation that confusion over WLTP (the Worldwide Harmonised Light Vehicle Testing Procedure) and the possible drag it could cause on the new car market.

With that in mind, Lookers stated that it is still on track to achieve market expectations for the full year.

In the used car sector, turnover increased by 12% and gross profit was up by 4%. Turnover on aftersales increased by 6%, while gross profit was up by 7%.

Over the H1 period, Lookers closed two dealerships and opened a new site, with a further £10m of capital was directed at improving dealership facilities.

Andy Bruce, Chief Executive of Lookers, said: “I am pleased with our performance over the first half of the year, which has been delivered despite ongoing challenging market conditions. Although profits, excluding a profit of £7.6 million on the sale of a property, are down on last year, as expected, this was due to a very strong comparative period, driven by record new car sales ahead of the decline seen across the market from April 2017.

“Against this backdrop, we continue to show good strategic momentum, winning market share and outperforming the wider industry, demonstrating the benefits of our clear strategy of having the right brands in the right locations, with a well invested dealership portfolio combined with excellent execution. We are also benefiting from our scale and our diversified business model which has resulted in revenue and gross profit growth across both used cars and aftersales.

“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. Based on our first half performance we expect to meet market expectations for the full year.”

Lookers is one of the largest dealership groups in the UK. The company was 3 in the Motor Trader 2017 Top 200 Franchised Dealer rankings with an estimated annual turnover of £4.81bn.