AM Online

Record Q3 result for Lookers

Lookers has reported a record trading performance in Q3 with new car sales up 11% and used car volumes up 12%.

The top five AM100 group said used car margins also increased and it reduced its fleet volumes by 18% primarily due to a specific low margin fleet deal in 2011 which was not repeated this year.

Lookers’ aftersales performance was flat and the group did experience a “small erosion” in gross margins in Q3.

The business said the performance was down to its strong focus on used car pricing, stock management and continued investment in its internet and social media marketing.

Parts volumes were up in Q3 and gross margins reduced slightly, but Lookers said its control of overheads helped to reduce the impact on profitability in the division.

The sale of surplus assets has realised £5.6 million in the nine months to September 30 and the group has repaid £3.75 million of bank loans in this period.

Net debt is at a higher level than last year due to the acquisitions of Lomond Motors and Northern Irish contract hire company Fleet Financial. Lookers believes these recent acquisitions will add a “significant contribution” to the motor division.

The group is still acquisitive in both its motor and parts divisions.

In its interim statement Lookers said: “While economic conditions continue to affect consumer confidence, restricting recovery in the new and used retail sectors, we continue to improve the operational and financial performance of the group

“The aftersales bias to the business and our strong performance over the last three years, demonstrates the ability of the group to perform well in a challenging market. We therefore continue to anticipate that the results for the financial year to December 31, 2012 will be in line with management expectations.”

Analyst view

Mike Allen, Panmure Gordon equity research, support services executive director, said: "Lookers has continued to make market share gains across all major parts of its business while demonstrating good pricing discipline.

"The reduction in net debt has also been impressive particularly in the context of acquisition spend this year. This should keep interest costs low, while also keeping its powder dry for strategic acquisitions in both the motor and parts divisions should the appropriate opportunities arise."

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