Lookers raises earnings forecasts as auto dealership group’s average sales price for new cars rises nearly 13%
- Lookers saw its underlying full-year profit decline, but sales rose
- The group says it will have sold fewer new and used cars in 2022 than in 2021
Car dealership group Lookers has raised earnings expectations after average new car sales prices rose nearly 13 percent last year.
Group sales increased thanks to higher new car costs for motorists, offsetting a 5.8 percent decline in new and used car sales over the period compared to the prior year.
The group strengthened sales of car finance and saw profit margins on all its leases increase in 2022.
Higher prices: Viewers saw average new car sales prices rise nearly 13% last year
The London-listed company’s revenue for the year rose to £4.3 billion, up from £4.1 billion in 2021.
Underlying profit before tax fell to £82.7m for the 12 months ended 31 December from a record £90.1m last year.
The company’s top boss said last year’s performance was primarily driven by the “market outperformance and cost containment” of new and used vehicles.
Lookers directors proposed a final dividend of 2 pence per share, a 20 percent increase from 2021.
The group had a net cash of £66.5m at the end of the year and a property portfolio with a net book value of £290.5m.
Looking ahead, Lookers reported an “excellent start” to the first quarter, with underlying pre-tax earnings close to 2022. The group said it was poised to make acquisitions to strengthen its portfolio.
It’s also plowing ahead with plans to develop a new “destination center” for used cars called Lookers Car Hub. The standalone multi-franchise used car offering is expected to open in Middlesbrough in the last quarter of this year.
Lookers also said it continued to generate cash in recent months, with a net present value of £93 million as of March 31.
But the board said it remained aware of ongoing trade headwinds, including economic uncertainty, inflationary pressures and issues with both supply and logistics.
Despite those challenges, the board’s expectations for underlying profit before tax for 2023 are now ahead of previous forecasts.
“I am pleased to report another outstanding performance against a backdrop of material supply disruption, inflation and rising interest rates,” said CEO Mark Raban.
“We remain aware of consumer pressure and discretionary spending.”
Lookers shares rose today and rose 1.88 percent or 1.60 p this afternoon to 86.60 p, after falling about 9 percent over the past year.
UK new car sales up more than 18%
The UK’s new car market grew for an eighth consecutive month in March – and demand for electric vehicles had a record month, the latest industry figures released today show.
Registrations grew 18.2 percent year-on-year, the Society of Motor Manufacturers and Traders (SMMT) confirmed.
Battery electric vehicle (BEV) deliveries hit a monthly record of 46,626, representing an 18.6 percent growth, the figures show.
This was the best ‘new license plate month’ performance since before the pandemic – with March and September traditionally the busiest times for auto dealers due to the arrival of the latest number plates – but industry insiders warn that the ‘positive’ headlines are ‘masking’ a worrying decline in public demand.
In total, 287,825 new vehicles entered our roads last month – up from 243,479 in March 2022.
Mike Hawes, Chief Executive of SMMT, said: ‘The new March record month usually sets the tone for the year, so this performance will give the industry and consumers more confidence.
“With eight consecutive months of growth, the auto industry is recovering, bucking broader trends and supporting economic growth.”