National car dealer group Lookers says it has broken its own records for first quarter trading.
The motor retailer, which runs dealerships under Lookers, Taggarts and Charles Hurst brands, said Q1 2015 was “a healthy improvement” on the same period in 2014.
Gross profit from new retail cars increased by 4% with margins ahead year-on-year. Gross profit from new fleet cars rose by 12% with margins stable.
Used car gross profit also rose by 10%, with focus on stock management and sourcing having helped improve volumes and margins, and an increasing number of leads from its recently upgraded website.
Dealer aftersales revenues grew by 7% and gross profit by 9%. Lookers said: “The increase in volumes and margins is also a result of the various initiatives that we have made in recent years to develop the aftersales business, in particular the increasing proportion of our customers who choose to enter into service contracts, which continues to improve customer retention.”
The group’s independent parts division, which supplies motor factors, “made good progress” and increased revenues and pre-tax profit in an improving but competitive market.
Cash flow continued to be strong during the period and was significantly higher at both the operational and net cash flow levels compared to budget, whilst the ratio of net debt to EBITDA remains well below 1.0.
“With low gearing and high levels of unutilised bank facilities, the group has a significant amount of additional funding capacity,” Lookers said.
“The group has made a good start to the year with excellent results for the first quarter from both the motor and parts divisions.
“The balance sheet continues to be strengthened by strong operational cash flow and positive working capital management and we have substantial headroom in our bank facilities. This provides financial security as well as funding capacity to help develop the business through further strategic acquisitions in both the motor and parts divisions.
“The financial performance of the group in the three month period builds on what was already a strong comparative in the previous year. We therefore believe that the results for the year ending December 31 2015 should be in line with current market expectations.”
Stockbroker Zeus Capital said following the Lookers trading statement: "Lookers has delivered a confident trading update, confirming that it has had a record Q1, which compares to strong comparatives in the prior year.
"We are maintaining our forecasts on the back of this update, but believe there is some potential for upgrades as we progress through the year if market conditions remain the same. We believe the valuation remains undemanding, and that Lookers remains well positioned in the current environment."
> For more analysis on Lookers' results and the biggest dealer groups in the UK, come to the AM100 Dinner on June 11 to see the official unveiling of the AM100 listing ahead of publication in AM. It’s also a great opportunity to network with those retailers. More details at www.am100dinner.co.uk