Interim Management Statement

RNS Number : 0142D

Lookers PLC

10 May 2012

 



Interim Management Statement

Lookers plc, ("Lookers", "the company" or "the group"), one of the leading UK motor retail and aftersales service groups, is issuing this interim management statement for the period from 1 January 2012 to 9 May 2012.

We are pleased to report that the group is continuing to produce strong financial results and we therefore expect group results for the half year to 30 June 2012 to be in line with management expectations.

The motor division has made an excellent start to the year with trading during the quarter ended 31 March 2012 and particularly during the critical month of March, ahead of both budget and the prior year.

The UK new car market increased by 1% in the three months to 31 March, which included a 6% increase in retail sales and a 3% reduction in the fleet market. Our new car retail sales increased by 6%, in line with the overall market. Fleet sales, however, were slightly ahead of the market. New car margins were maintained at a similar level to last year and fleet margins increased compared to last year. Whilst economic conditions continue to restrict recovery in the new car market generally, we are encouraged by the group's positive start to the year.

Used car volumes for the quarter were significantly higher than the prior year with an increase of 11%. Margins were also higher than the previous year, so the financial performance from used cars has had a particularly positive start to the year.

Aftersales revenue was slightly ahead of the prior year, with margins held at a similar level to last year, as the group continues to improve its share of the market. This demonstrates the success of our investment in technology and procedures to improve customer retention and average sales value per customer visit.

As we reported in our final results for 2011, turnover in our independent parts division has been affected by a modest reduction in demand and is slightly below last year, as motorists defer non essential maintenance spend. Gross margins however, have been maintained at the same level as last year and overheads are below budget, which have helped to reduce the impact of reduced revenue on the overall profitability of the business.

Working capital continues to be well managed with operational cashflow significantly ahead of both budget and the prior year. Net cashflow for the period was significantly ahead of budget and the sale of surplus assets realised £5.0 million. Net debt is therefore at a much lower level than both budget and the position at 31 March 2011.

Outlook

The motor division has made an excellent start to the year and has produced a strong result for the first quarter, despite the challenging conditions in the motor retail market.

Whilst the parts division has suffered from a marginal reduction in turnover, it continues to produce good results and makes a significant contribution to group earnings which are not affected by fluctuations in the new and used car markets.

The group balance sheet has been further strengthened and we have substantial headroom in our bank facilities. This provides financial security for the group, as well as allowing funding for strategic acquisitions in both the motor and parts divisions, which will help to provide additional future growth.

The new and used car markets continue to be affected by uncertain economic conditions. However, the aftersales bias to the business and the strong performance over the last three years, demonstrates the ability of the group to perform well in challenging markets. We are therefore confident that the group is in a good position to deliver a strong first half year performance and make further progress in the year, as well as being exceptionally well placed to benefit from medium term market recovery.

For further information:

Lookers plc	Telephone:  [phone]
Peter Jones, Chief Executive
Robin Gregson, Finance Director
Tavistock Communications	Telephone:  [phone]
Catriona Valentine/Keeley Clarke

 

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