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Lookers turnover rises in half year but profits slide on tough comparative

The motoring retail and aftersales services group reported an adjusted pre-tax profit for the period of £43.1mln, down 14% on the same period a year ago, while turnover rose 5% to £2.58bn

Cars parked
The used car division reported a 12% jump in turnover, however new car sales were flat

Lookers PLC (LON:LOOK) has reported a rise in turnover in the first half of the year, although it also suffered a decline in profits against a tough comparative from last year.

The motoring retail and aftersales services group reported an adjusted pre-tax profit for the period of £43.1mln, down 14% on the same period a year ago, while turnover rose 5% to £2.58bn.

READ: Lookers motors higher as it reports strong first quarter, despite stalling demand for new cars

The company also upped its interim dividend by 5% to 1.48p, while its net debt was lower at £54.5mln compared to £61.9mln in the first half of 2017.

In its divisions, the company reported a 12% increase in turnover in it used car business to £996mln in the period compared to the first half of last year, while new car sales remained flat at £1.3bn, after-sales grew 6% to £228mln, and leasing and other incomes fell 7% to £41mln.

In its outlook, the firm said that it expected a positive profit performance in the second half due to a more balanced distribution of profits following a “distortion in the market in the first quarter of last year due to the effect of changes in (vehicle excise duty) last April”.

Lookers added that it still expected its full-year performance to be in line with current market expectations, adding that uncertainty in the market caused by Brexit could be mitigated by “substantial headroom” in its banking facilities in addition to low levels of net debt.

In a note to clients, analysts at City broker Numis reiterated their ‘Buy’ rating on the stock, saying that the current valuation of sub-8x price/earnings ratio “does not reflect Lookers’ forecast resilience, the substantial growth opportunity in Used, cash flow dynamics set to improve markedly as dealership investments fade, and the clear potential to leverage its liquidity and track record into acquisitions”.

They added that the company’s “strong acquisition record” meant it was “well-positioned to be the prime agent of industry consolidation in the coming years”.

In mid-morning trading Wednesday, Lookers shares were up 0.7% at 105.8p.

--Adds broker comment and updates share price--

Quick facts: Lookers PLC

Price: 57.9 GBX

LSE:LOOK
Market: LSE
Market Cap: £225.37 m
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