Lookers set to beat expectations on 2021 profit before tax
Vehicle retailer and service provider Lookers said in a trading update on Friday that it expected underlying profit before tax for the year just ended to be ahead of the market consensus of £82m.
The London-listed firm said its balance sheet at year-end on 31 December was “strong”, with net cash of around £8m, swinging from net debt of £40.7m at the end of 2020, and property with a book value of £303.9m, equivalent to 77.8p per share, as at 30 June.
It indicated its intention to continue to invest in the business, and to restore dividends alongside the full-year results.
In October, the Lookers board launched a review of the group, its strategic growth opportunities and capital allocation framework.
The company said on Friday that the review was designed to build on Lookers’ strong market position, brand partner relationships and property estate.
It said it would address a number of long-term market trends including changing consumer behaviour, the impact of electric vehicles, the competitive landscape, developing relationships with original equipment manufacturers, changing technology, and the regulatory environment in which the group operates.
The review was said to be “well underway”, with its initial conclusions providing a framework to maximise the firm’s revenue and profit opportunities, and explore new initiates to deliver its aspiration to become “the UK's leading integrated automotive retail and services group”.
To achieve that, Lookers said it would focus on operational optimisation, investment in technology and digitisation, expanding original equipment relationships, increasing used vehicle penetration, developing after-sales revenue streams, and leveraging corporate leasing and fleet capabilities.
Lookers said it would provide an update on its strategy alongside its full-year results for 2021, which would be published on 13 April.
“2021 was an exceptional year for Lookers and we now expect to beat our previous estimates with record profit for the year,” said chief executive officer Mark Raban.
“This is a great achievement by the whole team in a year which brought many external challenges, including Covid-19 and vehicle shortages, demonstrating the strength of our proposition.
“With net cash at the year end, we have a strong balance sheet and good capacity to invest in future growth opportunities.”
Raban said there were a number of structural changes which were creating opportunities in the company’s market, including evolving consumer behaviour, electrification, and changing relationships with brand partners.
“The board and executive have been refreshed and we are well progressed with a major review both to improve our operational performance and to future proof our revenue streams through a number of strategic growth opportunities.
“We have outlined our main areas of focus in our update today and are excited about our ambition and aspiration to become the UK's leading integrated automotive retail and services group.”
At 0936 GMT, shares in Lookers were up 1.23% at 70.86p.