After several stagnant years, new UK retail car registrations rose 8.7 per cent in the first half of 2012, but motor dealer Lookers did better still. The company increased volumes by 11 per cent, a performance which helped it deliver record pre-tax profits of £24.1m and continue paying down its debt, but not at shareholders expense as the board has confidently pencilled in an 8 per cent full-year dividend increase.
Finance director Robin Gregson said that the improvement had been partly stimulated by European car manufacturers responding to the pound's strength by targeting the UK with attractive offers. Used car volumes rose 11 per cent, with gross profit per unit up 9.5 per cent to an industry-leading £1,200. The 14 per cent improvement in pre-tax profit in the motor division was also helped by the reduction of lower margin fleet business in its sales mix – while fleet volumes fell 7.5 per cent, fleet profits actually increased as a result.
However, while the important aftersales business – which accounts for 60 per cent of the group's gross profit – held steady thanks to better sales processes, the independent parts division saw profits slip 13 per cent to £6.2m as cheaper competitive products took market share.
Broker Panmure Gordon expects underlying pre-tax profits of £35m and EPS of 6.8p this year (from £33.8m and 7p in 2011).
LOOKERS (LOOK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £265m | |
| TOUCH: | 68-69p | 12-MONTH HIGH: | 70p | LOW: 48p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 13% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.00 | 21.3 | 4.04 | 0.80 |
| 2012 | 1.03 | 23.3 | 4.55 | 0.80 |
| % change | +3 | +9 | +13 | - |
Ex-div: 31 Oct Payment: 30 Nov *Includes intangible assets of £61.6m, or 16p a share | ||||
