It’s a tough time for motor retailers, with new car sales in the doldrums and the ripple effects of 'diesel-gate' still in evidence. But analysts commended Lookers (LOOK) for reporting sales and gross profit growth across new cars, used cars and aftersales against a tough market backdrop last year. That said, “record” adjusted pre-tax profits of £68.4m still fell short of expectations, so the broker downgraded forecasts for the current financial year, and now expects pre-tax profits of £67.2m and EPS of 13.4p, from £66.7m and 13.7p in 2017.
Sales may wax and wane, but the group’s balance sheet remains in good nick, with the ratio of net debt to cash profits below one times. While chief executive Andy Bruce says acquisition opportunities still exist, he believes a new £10m share buyback scheme is “a more sensible” choice to create near-term value for shareholders. He’s also asking investors not to pay too much attention to the 27 per cent drop in reported pre-tax profits; this was largely the result of a £12m profit boost in 2016 following the £28m disposal of the parts business.
| LOOKERS (LOOK) | ||||
| ORD PRICE: | 94.5p | MARKET VALUE: | £375m | |
| TOUCH: | 94.1-94.9p | 12-MONTH HIGH: | 132p | LOW: 79p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 97p* | NET DEBT: | 25% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 2.46 | 43.9 | 9.3 | 2.6 |
| 2014 | 3.04 | 59.2 | 12.0 | 2.8 |
| 2015 | 3.65 | 62.8 | 12.9 | 3.1 |
| 2016 | 4.28 | 91.8 | 20.5 | 3.6 |
| 2017 | 4.70 | 58.4 | 12.1 | 3.9 |
| % change | +10 | -36 | -41 | +7 |
| Ex-div: | 3 May | |||
| Payment: | 31 May | |||
| *Includes intangible assets of £221m, or 56p a share | ||||
