Lookers lifts expectations after strong 2022 performance

Automotive retailer and service provider Lookers reported a strong trading performance in its full-year results on Wednesday, despite supply restrictions and logistics disruption, as it lifted its expectations for 2023.

The London-listed company's revenue for the year increased to £4.3bn, from £4.1bn in 2021.

Basic earnings per share improved 20.6% to 18.87p, while its underlying profit before tax slipped to £82.7m for the 12 months ended 31 December from £90.1m.

It was, however, up from £80.3m year-on-year when discounting £9.8m of Covid-related support in the prior year, with the board saying the performance in 2022 was primarily driven by new and used vehicle market outperformance and cost control.

Lookers also reported a robust balance sheet, with net cash of £66.5m and a property portfolio with a net book value of £290.5m, equivalent to a combined 92p per share.

As a result, the directors proposed a final dividend of 2p per share, making for a 20% increase compared to 2021.

Looking ahead, Lookers reported an “excellent start” to the first quarter, with underlying profit before tax ahead of 2022.

The company's continued robust order bank included around 18,000 new retail units and 24,000 fleet units as at the end of the first three months of the year.

Additionally, Lookers said it had continued to generate cash, with net cash of £93m as at 31 March.

However, the board said it remained mindful of continued trading headwinds, including economic uncertainty, inflationary pressure, and both supply and logistics disruption.

Despite those challenges, the directors said their expectations for underlying profit before tax for 2023 were now ahead of its previous expectations.

“I am delighted to report another excellent performance achieved against a backdrop of material supply disruption, inflation and rising interest rates,” said chief executive officer Mark Raban.

“It makes me immensely proud of the Lookers team and the progress we are making together.

“We have strong momentum in the execution of our strategic priorities.”

Raban said the company’s operational optimisation agenda remained “the cornerstone” of its strategy, adding that it had made “demonstrable progress” on its self-help initiatives.

“In addition, I am particularly pleased to see the expansion of our offerings through partnerships with a number of exciting new brands and the addition of incremental revenue streams including cosmetic repairs.

“We remain mindful of pressures faced by the consumer and on discretionary spending.”

However, Mark Raban said the board was confident in the firm’s proposition, its balance sheet and strategic focus, with significant opportunities ahead.

“With good momentum across the business, we have continued to trade strongly in the first quarter of 2023, and the board's outlook for underlying profit before tax for the current financial year is now ahead of its previous expectations.”

At 0901 BST, shares in Lookers were up 3.65% at 88.1p.

Reporting by Josh White for Sharecast.com.