Lookers turnaround to deliver £50m pre-tax profit in H1 2021

Lookers has said that a positive swing in performance that will see 2020’s H1 loss of £50 million converted into a £50m pre-tax profit in the first half of this year.

In a first-half trading update published this morning (July 29), the AM100 PLC said it had succeeded in delivering “an excellent trading performance” in the six-month period to June 30.

Despite continued disruption caused by COVID-19 and a shortage of both new and used car stock, Lookers said it had benefited from strong used volumes and margins underpinned by an improved hybrid, omni-channel customer experience.

The results also reflect a resilient aftersales performance and the benefits of material cost reductions resulting from a 2020 restructure targeting £50m in annual savings.

Year-on-year like-for-like comparisons with the period, which was heavily impacted by 2020’s H1 COVID-19 lockdown closure of UK car retail, showed a 47% uplift in new retail volumes, 43% in new fleet and 38% in used cars as aftersales revenues rose by 34%.

Lookers chief executive, Mark Raban, said: "The business has delivered an outstanding performance in the first half of the year, despite the multiple difficulties presented by the pandemic.

“The whole team has made extraordinary efforts to ensure our customers continue to receive an excellent service, however they choose to purchase a car through Lookers, and the enhancements made to our digital proposition have made a real difference.

“There remains some uncertainty and challenges for the second half, but given the current momentum in the business, coupled with our focus on operational excellence and continuous development of our omni-channel customer experience, the board is confident of delivering a strong result for the year."

Earlier this month Raban told AM that he is positive about the group’s future after overcoming a “perfect storm” of legacy issues and COVID-19 to report positive 2020 annual financial results.

Lookers said its board intends to resume the payment of dividends “as soon as possible” with a review of its current position expected upon publication of 2021’s annual financial results.

The group revealed that its buoyant H1 results included £9m of support from Government’s Coronavirus Job Retention Scheme (CJRS) and £4m in business rates relief and grants, but its statement said the group did not anticipate accessing further CJRS support in H2.

It said that it would maintain its focus on cash management and liquidity.

A net cash balance of approximately £30m as of June 30 compared to net debt of £11.0m at the same point last year and £40.7m at December 31.

Lookers also has a revolving credit facility for an initial £150m which was recently extended to September 30, 2023.