Lookers profit drops amid 'difficult' trading condtions

Motor retail and aftersales service group Lookers reported a drop in full-year pre-tax profit on Wednesday, a performance it described as "respectable" amid difficult trading conditions, particularly in the new car market.

In the year to the end of December 2017, pre-tax profit dropped 27% to £58.4m even as turnover rose 15% to £4.7bn. The company said the drop in profit was largely the result of an exceptional profit of £28m on the sale of its parts division in 2016. On an adjusted basis, pre-tax profit was up 5% to £68.4m.

Total new car turnover was up 12% and 3% on a like-for-like basis, while total used car turnover rose 19% or 13% against strong comparatives.

Chief executive Andy Bruce said: "We have delivered a robust set of results with good growth across all areas of the business, demonstrating the resilience and differentiation provided by the Lookers business model. Against a backdrop of a 5.6% dip in the new car market, we have seen strong momentum in used cars and aftersales.

"We have made good progress with our strategy over the year and remain focused on having the right brands in the right locations, combined with excellent execution that gives our customers a personal, relevant and multi-channel retail experience. We have managed our portfolio of dealerships to reflect this goal and our franchise representation is well positioned for the future."

Lookers said its order book for the delivery of new cars in March is in line with its expectations and the first quarter result is expected to be in line with management's expectations.

Canaccord Genuity said pre-tax profit of £68.4m was a miss versus its and consensus expectations of £73.8m, mostly due to a well-documented tough fourth quarter for new cars, in particular December.

"We think that H1 will be painful, but the underlying resilience and strength of the business model is firmly intact, in our view. We believe Lookers remains well positioned, operationally and financially, to consolidate the market. As the market starts to look beyond H1 and the comparatives ease, we think the shares will start to perform."

At 0950 GMT, the shares were up 1.3% to 94.50p.