Lookers plc, (“Lookers” “the company” or “the group”), one of the leading UK motor retail and aftersales service groups, issues its interim management statement for the period from 1 January 2013 to 14 May 2013.
The Company is pleased to report an excellent trading performance in the first quarter to 31 March 2013, which has continued to this date. These strong results were both ahead of budget and a significant improvement on the corresponding period in the prior year.
Our motor division has enjoyed further success, underpinned by strong like for like sales volume growth, making an excellent start to the year. The acquisitions which we completed in 2012 are also performing well. The result for the first quarter ended 31 March 2013, which includes the important month of March, was ahead of both budget and the prior year.
TheUKnew car market increased by 7% in the three months to 31 March, with the retail new car market rising by 11% and the fleet market improving by 3%. Our new car retail sales increased by 13%, which was 2% ahead of the market. Fleet volumes reduced by 7%; the reduction in volume being primarily due to low margin fleet business in 2012, which was not repeated this year. New retail car margins increased, compared to the prior year, and fleet margins also improved, more than offsetting the margin lost from the reduction in fleet volume.
Used car volumes for the three months continued the upward trend of last year with an increase of 17% over the prior year with stable margins. The increase in volume is particularly pleasing given the strong comparative and is a further demonstration of our strong focus on proactive pricing, stock management, improved buying and continued investment in the group’s website.
The aftersales business in the motor division increased turnover, with a small erosion in the gross margin compared to last year. We continue to invest in technology and procedures to improve customer retention and average sales value per customer visit, as well as further advances in improving customer satisfaction.
As we reported in our final results for 2012, turnover and profitability in our independent parts division were affected by difficult market conditions. However, it is pleasing to report that significant progress has been made in the first quarter of this year with product development and marketing initiatives having a positive impact. As a result, turnover and profit are ahead of last year and in line with management expectations.
Working capital continues to be well managed with strong operational cashflow, which is significantly ahead of both budget and last year. Net cashflow is also well ahead of last year and budget, with the result that net debt is at a lower level than budget. It is also a similar level to last year which is a positive move forward given that £18.3m was invested in acquisitions in the second half of last year. Our bank facilities therefore continue to have significant levels of unutilised capacity.
The motor division has made a strong start to the year and produced an excellent result for the first quarter. This is a creditable performance, growth in new retail sales being slightly ahead of the recovering market, combined with buoyant used car sales volume growth. Despite suffering from difficult, albeit improving market conditions, the parts division is producing good results, underpinning a strong start to the year for the group.
The group balance sheet continues to be strengthened by strong operational cashflow. We have substantial headroom in our bank facilities and net debt continues to be closely controlled. This provides financial security for the group, as well as providing funding for us to make strategic acquisitions in both the motor and parts divisions which will help provide additional future growth.
Whilst economic conditions are still affecting consumer confidence, we continue to improve the operational and financial performance of the group. The aftersales bias to thebusinessand our strong performance over the last four years, demonstrates the ability of the group to perform well in a challenging market. We are therefore confident that the group is in a good position to deliver a strong first half year performance in line with management expectations and make further progress during the rest of this year.