Lookers PLC (LSE:LOOK) raised profit expectations for the year and said it is commencing a share buyback programme.
Underlying profit before tax for 2022 is now expected to be not less than £75mln, although this is still below last year’s figure of £90.1mln.
In a separate statement, the automotive retail and services group told investors it will be buying back £15mln worth of shares.
Lookers said repurchasing the shares at the current discount to its cash and property portfolio, 98p per share, represents an attractive investment opportunity, with the purpose of the buyback to reduce the share capital and increase earnings per share.
Despite a strong third quarter, growth continued to be stunted by macro-conditions, such as global supply chain issues, inflation and general economic uncertainty, which Lookers believes will continue to impact its busniess for the rest of the year.
“We remain mindful of ongoing supply chain disruption and significant inflationary pressures affecting consumers and businesses alike,” said chief executive Mark Raban
“However, our intense focus on driving self-help operational efficiencies across the business and ensuring ongoing strong vehicle margin retention means that we are increasing our profit expectations for the full year.”
For the three months that ended 30 September 2022, the total UK new car market fell by 0.1%. Lookers said it outperformed the market by 5.6% in the period, boosted “by our omni-channel customer experience strategy”.
In September, an important month due to new registration plates, Lookers' new retail unit sales were up 11.5% against a 4.6% rise for the total UK new retail car market, with underlying pre-tax profit for the month in line with last year.
Like-for-like unit sales were down 7.1% in the third quarter, although this was an improvement on the 8.3% decline reported in the first half.
According to its trading update, the company is making good progress on strategic priorities, having signed a franchise deal to represent Lotus in Northern Ireland from the fourth quarter and being appointed retailer by Great Wall Motors for its first electric car.
Looker improved it net cash balance to £86mln, compared to £33mln at the same stage last year.