Lookers chief executive Mark Raban has told AM that he is positive about the group’s future after overcoming a “perfect storm” of legacy issues and COVID-19 to report positive 2020 annual financial results.
Raban said the business was able to move forward with “renewed confidence” after posting revenues down 23% to £3.69 billion (2019: 4.81bn) but underlying pre-tax profits of £14.1m – well ahead of 2019’s restated £4m result.
But after the AM100 group's new auditor BDO delayed publication to the Financial Conduct Authority’s (FCA) official deadline for the reporting of 2020 results, he said: “I’d have been a little more pleased if it hadn’t gone right to the wire.”
“Embedding the new auditor was always going to be challenging,” said Raban.
“The thing is that different auditors take different views and quite a lot of the delay was caused by the need to go over 2019 results again. You’ll see that there was quite a lot of re-stating of results.
“Those auditors have got to be allowed to get on with their jobs and we’re pleased with them. I’d have been a little more pleased if it hadn’t gone right to the wire, though.”
Lookers battled COVID-19 lockdowns alongside legacy issues which delivered a fraud investigation and a temporary suspension of shares trading, a board restructure and a wider group restructure involving the closure or consolidation of 12 dealerships and 1,500 staff redundancies in 2020.
Raban described the situation as a “perfect storm”, but told AM: “What happens when you’re put under pressure like that? I think we’ve moved forward several years in just a few months as a business.
“This was our third trading update of 2021 so far and I’m coming out of this period with renewed confidence for the future.
“We don’t have anyone on furlough now. All our staff are back in the business and hard at it.
“I think when you look at the productivity improvements that have been made – unaccompanied test drives saving time for sales executives and online finance applications another 20 minutes a time – I think we’re positioned to perform better than ever.”
Raban said that the improvements had contributed to stronger margins in 2020.
He said: “A gain of 10 basis points in a £4 billion business is a lot of cash, and we’ve seen that trend for stronger margins continue into 2021.”
Raban said that he did not foresee any further cost saving from Lookers in terms of dealership closures or redundancies, but admitted that it would be subject to a retail model that was set to change.
He said that the group was in discussion with franchise partners about a move to agency model franchise agreements, but said that the approach would vary from brand to brand.
Commenting on the impact of the widely-reported global shortage of semiconductor microchips on new car supplies, and increasing competition for used cars, Raban said that Lookers was performing strongly.
While he said that it the supply of new cars in a “vital September” number plate change months was in the hands of OEMs, he said the group’s stock of used cars was currently around 1,000 units down on its usual 9,500 to 10,000 volume.
But he added: “Am I worried about that? No. At the moment our stock turn is really impressive. The used car sector is extremely buoyant.”