Lookers ups profit forecast as trading accelerates post lockdown

Lookers expects full-year profits to "comfortably" beat forecasts, the car dealership said on Tuesday, sending the shares higher.

The group said it had seen "strong" trading after its showrooms reopened on 12 April. In the four months to 30 April, like-for-like sales of new retail and fleet cars were ahead 26.6% on the same period a year previously, while aftersales revenues rose 25.4%.

Lookers said: "While recognising that uncertainty remains in relation to Covid-19, consumer sentiment and some new and used supply constraints, we now expect underlying profit before tax for 2021 to comfortably exceed current market consensus."

The upbeat forecast helped lift the shares and by 1145 BST they were trading 6% higher at 67.9p.

Chief executive Mark Raban said: "It’s encouraging to see our strong trading momentum continuing, with very positive customer response following the reopening of our dealerships."

Lookers also confirmed that it had renewed its bank facility, with a revolving credit facility of £150m now running until 30 September 2023. Group net debt currently stands at £4m.

Lookers endured a difficult period after it emerged it had been overstating profits for a number of years. In November, it finally published much-delayed restated results that showed it had tumbled to a £45.5m loss in 2019.

The firm said the renewal of its banking facility was an "important step". It added: "Year-end procedures with its new auditors BDO are progressing as planned, and the group will release its audited preliminary results for the year ended 31 December in the second half of June."

Peel Hunt, which has a ‘buy’ rating on the stock, upgraded its full-year pre-tax profit forecast by 16% to £40.3m, and by a similar level to £51.8m for 2022, following the update.

"Were it not for caution around potential supply constraints, we would be pushing through much bigger upgrades. Either way, the outlook for a swift recovery in earnings to more normal levels continues to improve, while the shares are trading on just 6x full-year 2022 PE, backed by a strong balance sheet and an evolving business model," it said.