Car dealer Lookers, number four in the AM100, has reported its seventh successive year of profit improvement in the six months to June 30, 2015.
Revenue was up 9% on 2014 to £1.75 billion and profit before tax increased to £39.9 million, up 6%.
Andy Bruce (pictured left), chief executive, said: “We have delivered a strong trading performance in the first half of the year which is another record result and the seventh successive year of improved profitability.
“Both the motor and parts divisions have produced excellent results with improved cash flow for the period, further strengthening our balance sheet.
“We are well placed to take advantage of growth prospects across all areas of the business as well as consolidation opportunities in the sector. This gives us confidence that we can continue to grow and deliver improved results for the full year.”
Revenue increased to £1.75 billion (2014: £1.6 billion) - up 9%
Adjusted profit before tax increased to £43.1million (2014: £40.2 million) - up 7%
Profit before tax increased to £39.9 million (2014: £37.7 million) - up 6%
Earnings per share increased to 8.08p (2014: 7.59p) - up 6%
Net debt reduced to £38.2 million from £51.9 million at 1 January 2015
Increase in interim dividend of 10% to 1.07p per share (2014: 0.97p)
Of its full year, Nigel McMinn (pictured right), managing director, expects market confidence to continue leading the new car market to well past 2.0 - 2.5 million units. “And we will continue to take our share – or make share gains – and as such have allowed for a modest upgrade in the full year on the back of half-year results a little stronger than the City anticipated.”
Levels of PCP business at Lookers he said was at 78% (2014: 77%) and would not get much beyond this: “There will always be some products, such as Land Rover, that will not need to be sold with a tactical subsidy, with cash the preferred option.”
Lookers is also confident of its ability to retain PCP customers, approaching them with offers to move to a new car typically eight to nine months ahead of the end of a 36-month contract.
On the aftersales side, McMinn said service plan penetration was at 43% (2014: 40%, 2013: 33%), supported by 40 months of new car registration growth, fuelling work on the up to three year old parc. He wants the statistic to grow as the company becomes “more proficient at locking in customers”.
On the challenge of winning conquest sales in a market led by PCP ‘lock-ins’, McMinn stressed the importance of the web to Lookers: “Customers search online for their next car and they’ll start with the manufacturer before choosing the dealer. Our focus is on making sure we maximise the SEO and Google paid search opportunities, so we’re easy to find and making sure we have very aggressive offers, mostly based on PCPs.”
As a result of its performance Lookers said it would improve its interim dividend by 10% on the news, up to 1.07 pence per share from 0.97p a year earlier.
Lookers' one year share price performance. Source: London Stock Exchange