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Lookers holds on to profits as market remains tough

Lookers has hit the £1 billion turnover mark at its half-year point following 1.4% growth in sales on last year.

The top 5 AM100 franchised dealer also maintained profitability with a £21.3m pre-tax profit, down just a fraction on 2010’s £21.4m at the same point.

Chairman Phil White described it as “a significant achievement” against a backdrop of difficult conditions in the motor retail market and uncertain general economic conditions.

He said the encouraging first half performance leaves Lookers confident of a successful full year result.

The motor division, which comprises 119 franchised dealerships, saw new retail car sales fall but stay 5.4% ahead of the sector’s 18.1% national decline, indicating a continued increase in market share to 4.04%.

It took a 1.79% share of the fleet sector, after slightly reducing its activity in the corporate sector, which has grown 3.1% nationally, to avoid very low margin deals.

However it saw gross profit levels maintained on retail cars and improved on fleet sales.

Used car volumes have grown by 5% on 2010 levels, although gross margins dipped by 3.4%, and White said this area remains a huge opportunity for the group.

He also reported an increased share of the aftersales market, with margins and revenue maintained. Improvements in CRM have brought increased conversion rates, and use of electronic vehicle health checks and service plans is improving customer retention and spend.

Overall the motor division maintained adjusted profit before tax at the same level as last year at £18.5m.

The period also saw Lookers close or sell five underperforming dealerships while adding three other businesses, two of which were additional franchises on existing sites.

Its parts division, which distributes aftermarket parts nationally to motor factors, continued to perform well and has improved in profitability, to be ahead of both budget and the prior year.

Its revenue rose by 7% and adjusted profit before tax lifted 3% to £7.1m.
 

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