Interim Management Statement
Lookers plc, one of the leading UK motor retail and aftersales service groups, is issuing an interim management statement for the period from 1 January 2011 to 11 May 2011.
We are pleased to report that, following the record result for the 2010 financial year, our trading performance for the first quarter is ahead of budget and prior year and the group is continuing to produce strong financial results. Consequently, we expect group results for the half year to 30 June 2011 to be in line with management expectations.
The result for the motor division for the first quarter was in line with budget, although slightly lower than last year which included profits on vehicles sold in the last month of the scrappage scheme. New car retail volumes for the quarter were clearly impacted by this factor, with the UK new car retail market reducing by 18.0%. However, we continued to gain market share, with a volume reduction in new car retail sales of 10.5%, significantly ahead of the market. New car margins remain at satisfactory levels and are ahead of budget for the quarter. We continue to improve the balance of our portfolio of franchise representation and in the first quarter we have sold or closed four underperforming businesses and added an additional two businesses.
Used car volumes increased by 6% in the quarter, compared to last year and margins continue to be at satisfactory levels and consistent with last year. Aftersales revenue in the motor division was a similar level to last year however, the gross profit margin has improved in the first quarter, resulting in increased profits from this important area of the business.
It is also pleasing to report that Get Motoring UK Limited, which was acquired in March this year, has made a good start as part of the group and profitability for the period since acquisition is ahead of expectations.
The motor division has made a good start to the year which represents a continuation of the progress made over the last two years. Economic conditions remain challenging driven by fragile consumer confidence and there are also likely to be some restrictions in the supply of new cars as a result of the Japanese earthquake. However, the broad base of our franchise representation and the restructuring of the motor division over the last two years, provide us with greater resilience to meet these challenges.
Our market leading independent parts division continues to perform well and has made further improvements in profitability, producing a strong start to the year, with profitability ahead of both budget and last year.
We continue to focus on working capital management and cashflow is in line with budget. Net debt continues to be well managed and at a similar level to budget with
the consequence that we continue to have significant levels of unutilised bank facilities.
Both operating divisions have made an excellent start to the year which gives us confidence that the result for the half year should be in line with management expectations.
As previously mentioned, the new and used car markets continue to be affected by consumer confidence and could be subject to possible supply issues. However, the aftersales bias to the business, combined with the strong performance over the last two years, demonstrates the strength of the group’s business and its ability to perform well in a difficult market.
Our independent parts distribution business remains a key differentiator for Lookers in the retail motor sector and continues to invest in new product lines and opportunities to expand the business. It provides a hedge against fluctuations in the new and used car markets, as well as making a significant contribution to group earnings.
The group balance sheet has been strengthened significantly over the past two years and this, together with substantial headroom in our bank facilities enables us to continue to look at further strategic acquisition opportunities, as they arise. We are therefore confident that the group is in a good position to make further progress in this year and beyond.
Commenting on the statement Peter Jones, Chief Executive said:
“Although market conditions remain challenging, we are very pleased with the excellent start to the year. Both the motor and parts divisions have produced strong trading results in the period which gives us confidence that we will continue to trade successfully this year and be in a position to take advantage of growth opportunities should they arise.”
For further information:
Telephone: 0161 291 0043
Peter Jones, Chief Executive
Robin Gregson, Finance Director
Telephone 020 7796 4133
Nick Lyon / Kate Hough