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Analysts downgrade Lookers forecast

Analysts have marked down Lookers profit forecasts for 2007 after the group released its trading statement this morning.

Jose Marco, Numis Securities investment analyst, had previously expected Lookers to post a pre-tax profit of £30 million but reduced his expectations to £24.5m.

His forecast puts Lookers almost £2m down on its 2006 pre-tax profits of £26.4m.

David Dyson, Lookers finance director, told AM: "The second half of the year was tougher than we expected. We will be increasing our dividend and we’re happy with the figures we’ve produced."

While the profit expectations have been reduced, Marco expects Lookers to increase its earnings per share from 7.16p in the first half of 2007 to 9.16p.

Lookers said the contribution from aftersales continued to grow and new car volumes were ahead of 2006, but margins for both new and used cars came under pressure, particularly in the last quarter of the year.

Marco is expecting Lookers to increase its pre-tax profits to £33m in 2008, which would represent a 33% increase in year-on-year growth in earnings per share.

He said: “We are assuming a relatively flat performance from the underlying business and a positive contribution from the Dutton Forshaw and Ford dealership acquisitions, as well as the turnaround of the used car supermarket business."

Lookers said integration of Dutton Forshaw was well under way and that it was being implemented according to plan.

Lookers directors have been buying thousands of shares over the past couple of weeks. Tony Bramall, a Lookers board member, acquired 140,000 ordinary shares taking his and his family’s stake to 19.75% of the issued share capital of Lookers or 35,767,710 shares.

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