Lookers issues profits downgrade
12 July 2019
Lookers has downgraded its profits expectations for the first half of 2019 following a decline in the market in the second quarter of the year and expects the full year figures to be lower than planned too.
The group, which is currently being investigated by the FCA, blamed a general slowing of the new car market and lower margins on used cars for the drop in expected underlying profit before tax for H1, which will be formally revealed in mid-August.
Lookers also added it expected the decline to continue into the second half of 2019 and that full year profits would be below expectations too.
In a half-year trading update the auto retail group said: “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 £32m compared to £43m in the comparable period last year.”
Lookers added: “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.”