Full Year Trading Update
("Lookers", "the Group" or "the Company")
Full Year Trading Update
Strong finish to 2022 - further increase in full year expectations
Lookers, one of the leading UK integrated automotive retail and service groups, today provides an update on the business, including trading for the three months ended 31 December 2022 ("Q4" or the "Period") and the full year.
· A further increase in the Board's expectations for underlying profit before tax for the full year ended 31 December 2022 to greater than £80m (2021: £90.1m, including £9.8m of COVID support)
· Strong balance sheet - net cash* balance of c.£70.0m as at 31 December 2022 (31 December 2021: £3.0m) and property book value of c.£297m as at 30 September 2022, combined equivalent to c.95p per share
· Share buyback programme continues in line with capital allocation policy, and the Board remains committed to a progressive dividend policy
Mark Raban, Chief Executive Officer, said:
"We've enjoyed a strong close to the year, outperforming the new retail market, leading to an increase in our full year profit expectations. This has been achieved against a context of significant supply chain disruption and unprecedented inflationary cost pressure. Despite a number of ongoing trading headwinds, we have started 2023 confidently. Our strong OEM relationships, clear strategic priorities, financial capacity and above all the commitment of my Lookers colleagues leaves us very well positioned for the future."
Q4 Trading Update
Trading in the Period was ahead of the Board's expectations with underlying PBT greater than in Q4 2021.
The UK new retail car market grew by 1.0% in Q4 (Q3 2022: -1.5%). The Group outperformed the market by approximately 3.1%, benefiting from a strong focus on its operational optimisation strategic priority and omni-channel customer experience. The total UK new car market grew by 22.7% as the continuing impact of semi-conductor supply chain issues begins to ease in some channels.
Q4 like-for-like used unit sales were 8.6% ahead of Q4 2021, an improvement on the -7.2% decline reported in Q3. Used vehicle margins have remained broadly in line with those reported at the half year and continue to profit from improvements in operational efficiency.
Aftersales revenues grew in the Period and were approximately 7.5% ahead of Q4 2021. During Q4 the Group maintained customer visits and gross profit margins broadly in line with Q4 2021.
Financial Position and Share Buyback Programme
The Board has continued to apply the policies set out in our capital allocation framework and maintains a capital structure to support the delivery of the Group's strategic priorities.
At 31 December 2022, the Group had a net cash* balance of c.£70.0m (31 December 2021: £3.0m) and property with a book value of c.£297m as at 30 September 2022, combined equivalent to c.95p per share.
In line with our capital allocation policy, the Group commenced a share buyback programme of up to £15m in October 2022. As at 31 December 2022 the Group had purchased 5.7m shares at a cost of £4.5m equivalent to an average price of 78p per share.
Update on OEM relationships
The Group previously announced its appointment as franchise representatives for the ORA and Lotus brands. We have now opened our ORA showrooms in existing properties and our Lotus showroom in Belfast is expected to open in Q1 of this year.
We continue to develop new OEM relationships to expand the Lookers offering. We are delighted that we will be representing a leading global Chinese EV manufacturer on their entry into the UK market, from existing locations in the North East, South Yorkshire and Northern Ireland. In addition, we are pleased to add the iconic MG brand to our brand relationships and will represent MG from our existing site in Worcester.
A further update on all our strategic priorities will be provided alongside the release of our 2022 preliminary results on 5 April 2023.
The Board is encouraged by the strength of trading in Q4 and the magnitude of our new car retail and fleet order banks entering into 2023. However, we are also conscious of the potential impact on consumer spending by external factors such as high inflation and interest rates. We begin the new financial year with confidence in the resilience of our business model and 'omni-channel' customer offering, and as such the Board's expectations for 2023 remain unchanged.
* Net Cash is before taking into account year end accounting adjustments including cash in transit
Mark Raban, Chief Executive Officer 0161 291 0043
Oliver Laird, Chief Financial Officer
Tim Rowntree / Simon Hockridge 07709 496125 / 020 3128 8193
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. The person responsible for making this announcement is the Company Secretary.
The Company is registered in England at Lookers House, 3 Etchells Road, West Timperley, Altrincham WA14 5XS. Company registration number 00111876. LEI number 213800TSB8PJEACDAV33