Lookers posts first quarter growth across the business

Motor retail and aftersales service company Lookers issued its first quarter trading update on Monday, and described its start to the year as strong with continued improvements across the business.

The FTSE 250 company said it produced a positive trading performance in the three months to 31 March, ahead of last year, with a strong result particularly during March.

Its motor division delivered good performance through the period, ti said, with total gross profit from new card increasing by 23% overall or 5% on a like-for-like basis.

Margins for both new retail and fleet cars were maintained at a similar level to the prior year.

In used cars, Lookers said gross profit increased during the period with margins also improving, resulting in a 23% increase in overall gross profit or 7% on a like-for-like basis.

Its used car volumes continued to increase, in part due to higher volumes of leads generated by the group’s website, which has increased further compared to last year.

“The website has recently been significantly upgraded and will benefit from further major developments later this year,” Lookers’ board said.

Aftersales gross profits improved 25% during the period, or 7% on a like-for-like basis, with gross margins also increasing.

The increase in volumes and margins continued to benefit from initiatives made in recent years to develop the division, including further increases in the penetration of the sale of service plans, the board said.

“We also continue to invest in new technology and systems to provide enhanced levels of customer experience to further strengthen the aftersales business.”

Finally, Lookers’ independent parts division made what it called “good progress” over the period with increases in both turnover and gross profit compared to the prior year.

This performance was against a background of an improving but competitive market, and margins were maintained at a similar level to the prior year, the board confirmed.

“Cash flow continued to be strong during the period and was significantly higher at both the operational and net cash flow levels compared to budget,” the board said.

“In our recent annual report, we referred to the sale of our Battersea VW dealership and are now pleased to report that we received the sale proceeds of £18.1m on 4 April which have been used to reduce group borrowings.

“Following the renewal of our bank facilities in September last year, we have a high level of unutilised bank facilities which provide the group with significant additional funding capacity.”

Looking ahead, Lookers said its balance sheet was continuing to be strengthened by strong operational cash flow and it maintains substantial headroom at its bank facilities.

“This provides financial security as well as funding capacity to help develop the business through further strategic acquisitions in both the motor and parts divisions.”

Lookers said the financial performance of the group in the quarter built on what was already a strong comparative in the previous year.

As a result, it believes the results for the year to 31 December will be in line with current market expectations, representing a significant increase over Lookers’ 2015 performance.