July 6, 2022

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WEBSITE NEWS UPDATE

Lookers restores dividend as profits jump

3 min read

New and used car dealership Lookers has restored dividend payouts to shareholders after delivering record profits as demand boomed last year.

The group also announced the appointment of tech executive Deborah Sherry to its board as part of efforts to ramp up its used car operations, and expand its car components and repair services.

However, Lookers said supply of new vehicles was severely impacted by semiconductor supply shortages in the second half and is set to continue this year.

Like rival Motorpoint, it also warned that the rising cost of living will likely hamper demand for cars. 

In demand: Lookers is expanding its used car operations to tap in this booming market

‘The ongoing semiconductor shortage is likely to see new car supplies constrained for the remainder of 2022,’ Lookers said.

‘Headwinds caused by high levels of inflation in areas such as utilities, mean the group will experience material cost increases. 

‘Wider inflationary pressures and the macro-economic impacts of the crisis in the Ukraine add significant uncertainty to the trading conditions faced by the group.’

However, Lookers assured investors that margins are holding up well thanks to rising prices for used vehicles, with 2022 underlying profits ahead of last year. 

In 2021, it made a pre-tax underlying profit of £90.1million, compared with £13.7million in 2020, as revenues rose 9 per cent to over £4billion, today’s results show.

The record performance saw it restore dividend to 2.5p per share. But that was not enough to keep investors from worrying about supply shortages and rising costs, with Lookers shares falling 4.2 per cent to 92p.

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Despite challenges ahead, the group is expanding its used car operations to tap into this booming market, of which it currently controls just over 1 per cent. 

It is planning to open two of its Cube Concept used car centres this and next year, which will be in addition to its network of 11 sites. 

Lookers is also rolling out its repairs services to an extra 50 sites, which it expects to complete next year. 

And it said it is looking to expand its partnerships with original car parts makers, and will introduce new electric vehicle brands into the UK market in 2022 and 2023. 

As Lookers pushes ahead with these expansion plans, it has brought in tech executive Sherry, whose skills ‘are crucial to the next phase of our strategy’.

Sherry has held senior technology and commercial roles at France Telecom, Google, GE and Amazon and had ‘direct exposure’ to OEM (Original Equipment Manufacturers) and industrial clients.

Most recently, until January, she was chief commercial officer of magazine publisher Future.

Lookers chairman Ian Bull said: ‘We are absolutely thrilled that Deborah is joining the Lookers’ Board. Her experience and knowledge on technology, digital and commercial issues will really assist in the next phase of our strategy to become the UK’s leading integrated automotive retail and services group.

‘Deborah’s in-depth understanding of how the use of technology along with transformation projects can enhance and strengthen our relationship with customers and partners will be invaluable as we continue our investment and focus in this area.’

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