Lookers beats expectations as dealership’s sales grow despite a fall in car purchases amid vehicle supply chain disruption
- Altrincham-based Lookers saw total sales grow by 3.7% year-on-year to £2.2bn
- Average sales prices of the group’s second-hand cars climbed by over a quarter
- Lookers shares were the FTSE All-Share Index’s top riser on Wednesday morning
Continued supply chain disruption and surging vehicle prices helped car dealership chain Lookers to report another strong set of half-year results.
The Altrincham-based company saw total sales grow by 3.7 per cent year-on-year to £2.2billion in the first six months of 2022, thanks to increased revenues from used cars and aftersales.
Lookers delivered underlying pre-tax profits of £47.2million in the six months to 30 June, marginally beating expectations of around £45million, as the dealership benefited from a ‘material improvement in new vehicle gross profit margin’.
Performance: Amidst worsening inflationary pressures, Lookers saw total sales grow by 3.7 per cent year-on-year to £2.2billion in the first six months of 2022
Though the group sold about 9,400 fewer vehicles, its gross profits jumped as global semiconductor shortages led to a fall in automotive production, pushing up gross margins for new vehicles.
At the same time, the average sales price of its second-hand motors climbed by over a quarter, which enabled the firm to earn an extra £200million in revenue from used cars during the period.
Lookers had also benefited from significant UK Government financial support measures, such as the Coronavirus Job Retention Scheme, local recovery grants and business rates relief.
The firm has subsequently repaid all the money it received from those schemes after the reopening of its showrooms in 2021 led to the release of considerable consumer pent-up demand and record annual profits.
Shareholders have also been handed £9.8million in dividends, having received no interim payouts last year even after the company rebounded back to a profit.
Chief executive Mark Raban said the firm’s ‘performance was very strong, against an exceptional comparative period, despite ongoing inflationary pressure and vehicle supply disruption’.
He added that trading in July and August had been in line with anticipations, with margins being maintained at first-half levels and the group noting a healthy order book for the remainder of the year.
Lookers shares rose 6.7 per cent to 80p during the late morning on Wednesday, making the company the top riser on the FTSE All-Share Index. Over the past three years, the firm’s shares have grown by over 45 per cent.
Victoria Scholar, head of investment at Interactive Investor, hailed the ‘strong set of forecast topping results from the used car dealer, which is outperforming despite pressures from semiconductor shortages, supply chain bottlenecks, the war in Ukraine and inflation’.
She added: ‘Although the share price has retreated from its peak in March, the stock has still recovered extremely well from the 2020 trough rallying by more than 650 per cent off the lows when national lockdowns destroyed the business during the pandemic.’