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3 Months : From Jun 2019 to Sep 2019
RNS Number : 3053F
12 July 2019
12 July 2019
Half Year Trading Update
Lookers plc, ("Lookers" or "the Group"), one of the leading UK motor retail and aftersales service groups, today provides the following pre-close trading update ahead of the publication of its half year results for the six months ended 30 June 2019 ("H1") on 14 August 2019.
As reported in our AGM statement, trading for the three months ended 31 March 2019 ("Q1") was positive, underpinned by outperformance of the UK new car market and growth in both turnover and gross profit in used vehicles and aftersales.
Whilst the period began satisfactorily, trading during the three months ended 30 June 2019 ("Q2"), against strong comparatives, has proved increasingly more challenging. During Q2 the UK new car market continued to decline with registrations down -4.6% (Q1: -2.4%) versus the comparable period last year. In addition, weaker demand and the resulting margin pressure in the used car market has significantly increased, notably during the month of June in which we took a disciplined approach to managing stock.
Throughout H1 and in line with general retail sector trends the Group has continued to experience cost inflation pressures.
As a result, underlying profit before tax for H1 is expected to be approximately GBP32m* compared to GBP43m* in the comparable period last year.
*Underlying PBT before the proposed reclassification of amortisation on intangible assets.
Review of Regulated Activities
As announced on 25 June 2019, the Group has been informed by the FCA that it intends to carry out an investigation into sales processes between the period of 1 January 2016 to 13 June 2019. The Group continues to co-operate fully with the investigation and will provide a further update at the Interims on the level of investment required to support our improvement plan and other costs associated with this process.
The Group's balance sheet remains strong. In December 2018 the Group agreed a new, fully committed GBP250m revolving credit facility with a term to March 2022. At 31 December 2018 the Group had net assets of GBP399m, including freehold and long leasehold property of GBP309m at net book value.
Notwithstanding the more challenging market conditions in H1, particularly in Q2, the Group has delivered a robust financial performance underpinned by maintaining its strategy of strong operational execution and focus on the right brands in the right locations.
The Board now expects that the more recent challenging conditions are likely to continue into H2, exacerbated by continued weakness in consumer confidence in light of wider political and economic uncertainty, and further pressure on used car margins. There is also the possibility of new vehicle supply restrictions as new emissions regulations come into force during Q3. In addition, the retail sector cost inflation experienced in H1 is likely to continue to impact earnings during the second half of the year.
As a result of the above factors, the Board's current outlook for underlying profit before tax for the full year is now below its previous expectations.
Notwithstanding these short-term challenges, the Board continues to believe that over the long term the Group is extremely well positioned to take advantage of the many opportunities ahead as the sector continues to develop, underpinned by the Group's strong balance sheet and cash generation.
Notice of Results
The Group intends to report its Half Year results on 14 August 2019.
Lookers Tel: 0161 291 0043
Andy Bruce, Chief Executive Officer
Robin Gregson, Chief Financial Officer
MHP Communications Tel: 0203 128 8742
Tim Rowntree Email: Lookers@mhpc.com
Alistair de Kare-Silver
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(END) Dow Jones Newswires
July 12, 2019 02:00 ET (06:00 GMT)