Lookers aims to reverse out of the red
Lookers, the car dealership giant with a string of Scottish showrooms, swung to a £50 million loss in the first-half of 2020 as the pandemic forced its showrooms to close for large parts of the period.
The company said its statutory pre-tax loss followed a profit of £19.6m in the first half of 2019. It was a big hit for the business, which also saw a 40 per cent fall in revenue to just under £1.6 billion in the period, its delayed results revealed.
But the group – owner of the long-established Taggarts business and some Audi dealerships in Scotland – signalled that it had seen a more hopeful second half, and expects performance over the last six months to be ahead of 2019, partly offsetting the dismal first half.
“Trading in the second half of 2020 was encouraging, underpinned by significant outperformance of the retail UK new car market, continued resilient trading in used and aftersales, and increasing used car margins,” the firm noted.
It is also set to make some financial gains from a restructuring programme, which included closing a dozen showrooms and making 1,500 people redundant. Those showroom closures came on top of 15 undertaken in 2019.
Chief executive Mark Raban said: “2020 was a challenging
year for Lookers, managing the impact of the Covid-19 pandemic and a number of legacy issues facing the group, which required significant action to restructure and improve the business for the long term.
“Despite a resilient sales performance, the benefit of government support and prompt action to manage costs, in the first half we incurred a significantlossinaverydifficultperiod for the car retail industry.”
He added: “Although various restrictions continued into the
second half of the year, trading improved significantly, benefiting from the material cost-saving measures implemented earlier in the year and enhancements we have made to our retail offer, including the capability to carry out contactless vehicle sales.
“Going into 2021 there remains a high level of uncertainty in the wider environment,butweareconfidentthat the group is now much better positioned for the longer term and can capitalise on the various
opportunities ahead, not least in electrification and digital developments.”
The company will not pay out any dividend for the last year due to the coronavirus crisis, but the board said it will reinstate the payments as soon as is prudent.
On an underlying basis, Lookers reported a loss of £36.1m for the first half of 2020, compared with a restated profit of £22m a year earlier.
Analysts at brokerage Numis Securities said: “Lookers has reported interim results, in light of which an application for a restoration of the shares for trading has been made.
“The £36m loss in [the first half] looks comparable with peers and is noted to have been largely recovered across [the second half ]. “This is despite the November lockdown, reflecting a better if volatile market, healthy used car margins and the early impact of management cost action.”