Lookers’ pre-tax profits slip 28 per cent in first half of 2008
Lookers’ profits slipped during the first half of the year despite gains in revenue, according to the group’s interim results.
Operating profit for the six months to the end of June dropped 5.2 per cent from £25m in 2007 to £23.7m, while revenue rose 18.2 per cent from £878.9m to £1,039m.
However, after deductions pre-tax profit slumped 28 per cent from £18.1m to £13m.
“The more turbulent macroeconomic environment has resulted in challenging trading conditions across the UK new and used car markets particularly in May and June and this has impacted the performance of our new and used car businesses,” said Ken Surgenor, Lookers chief executive.
“However, I am pleased to announce that against this tougher backdrop the group has delivered a solid performance for the period. Our diversified business model gives us the flexibility to adapt to the current uncertainties within the UK and global economies and our used car supermarkets and independent parts businesses are showing significant year on year progress,” he said.
The board said it anticipates the full year results to be in line with the lower end of market expectations.
The group, number five in the Motor Trader Top 200, attributed the rise in revenue to its acquisition of Dutton Forshaw earlier this year.
While the Lookers’ franchise network division was hit by the current economic climate, its other businesses performed well.
New car sales on a like for like basis were down by 6.5 per cent – dipping lower than the drop in national retail sales of 4.9 per cent.
Among the group’s volume brands, Renault was hit hardest, dropping 14.9 per cent, while Lexus was the biggest casualty among its prestige brands will sales falling by 20.1 per cent.
Lookers did say, however, that it is confident it can adapt to the tough market conditions because of the flexibility of its business model.
It hopes to improve the performance of its franchise outlets by removing fixed costs of marginal satellite operations and redirecting the volume back to its main hub.
During this period the group has also reviewed dual franchising opportunities where the facilities are larger than the market opportunity for the existing franchise to share fixed costs.
The group said its used car supermarkets have continued to benefit from operational changes made last year including the closure of the Essex Trade Centre, trading profitably in the first six months of this year despite tough economic conditions.
The report also said Lookers’ independent aftermarket parts division had a “solid” first half of 2008.
The group currently operates 139 franchise outlets across 31 brands.