- Car dealer outperforms new car market
- Strong increases in used car and aftersales revenues
- First half dividend reinstated
Shares in Lookers (LOOK) revved up 5.3% to 79p after the car retailer resumed its interim dividend and reported a 3.6% uptick in first half sales driven by a strong increase in used vehicle and aftersales revenues.
Despite ongoing vehicle supply disruption and the cost of living crisis squeezing consumers, Lookers insisted trading during July and August was in line with expectations and it continued to ‘maintain a strong order book for the remainder of 2022’.
USED CARS AND AFTERSALES SHINE
For the first half to June 2022, pre-tax profit came in at £49.9 million, down 1% from the £50.4 million generated in the first half of 2021 when the car dealer benefited from ‘unprecedented’ used car market strength driven by pent up demand and relatively high levels of consumer disposable income as the country emerged from lockdown.
More positively, revenue ticked up 3.6% year-on-year to £2.23 billion thanks to increased demand for used vehicles and aftersales services.
Lookers also flagged its outperformance of the UK new car market, where the company said demand remains strong albeit with supply challenges continuing due to well-documented semiconductor chip shortages.
INTERIM PAYOUT REINSTATED
Investors were also pleased as Lookers reintroduced its interim dividend with a payout of 1p, having paid out 2.5p as an annual dividend in 2021, with management drawing confidence from the group’s strong trading performance and ‘excellent’ cash generation.
‘Our first half financial performance was very strong, against an exceptional comparative period, despite ongoing inflationary pressure and vehicle supply disruption,’ explained CEO Mark Raban, whose charge is looking to bring EV (electric vehicle) brands to the UK in ever greater numbers.
‘We remain focused on our customers and improving our proposition to ensure the process of buying or leasing a car is as easy and simple as possible, particularly in the current challenging economic environment. Notably, our recent “You Choose” brand campaign highlighted the progress we have made in our omnichannel capabilities.
‘Whilst mindful of the pressures facing consumers, we are confident in our strategic direction and retain our expectations for the remainder of the year.’
