The bid defence promised pre-tax profits of £25.1m in the year ending December 2006. That looked a stretch compared with the £16.4m of last year but Lookers delivered £12.8m for the first half – after accounting for the £4m that it cost to defend the bid.
Earnings per share – the key indicators of profit progress – was up 50%. Chief executive Ken Surgenor said that “there had been a lot of talk” about the forecast – meaning that not everyone could believe it.
“It was a challenging forecast,” Surgenor said on Monday, “but we never make forecasts lightly.”
The margin is rising and has now reached 3% from the 2.3% of last year. It may not stay like that for the year because the market is weaker and the Lookers first half is traditionally the stronger.
But continued success in the strategy of decentralized management, together with expansion into both the parts and car supermarket businesses where margins of 5% are quite normal, mean that group margins can rise again.
Fred Maguire retired after six years of his chairmanship. His successor is Phil White who has been chief executive of National Express, the bus business, for the last nine years.
Tony Bramall, who bought a blocking share stake in Lookers at the time of the bid, was not considered for chairman and did not wish to be.
Lookers latest acquisitions – and there has been a £200m refinancing to sustain the buying programme – have been HR Owen businesses. They were said by Nick Lancaster, the chief executive, to be incapable of generating profit because of the policies of manufacturers.
Lookers believe their systems will generate profit and said in their statement that Ford’s Premier Auto Group was already substantially profitable for them.
Surgenor said that despite a programme to expand their three-site presence in car supermarkets, Lookers was not a bidder for CarLand, the six-site business being sold by General Motors’ Masterlease for a rumoured £50m.The size was “a bit big for them at the moment”, he said.
The AM view
Fred Maguire’s association with Lookers comes to an end with the group looking stronger than ever. Phil White is inheriting a forward looking group poised for further acquisitions.