LSH Auto losses hit £18m ahead of pandemic
14 December 2020
LSH Auto, the UK subsidiary of the world’s largest Mercedes retailer, has reported losses of £18.2 million in its results for 2019 on a turnover of £454m.
The Hong Kong headquartered firm entered the UK mid-way through 2016 when it bought the Birmingham and Manchester market area sites from manufacturer-owned Mercedes-Benz retail and has lost money in every year since. In the last six months of 2016 it lost £2.8m, 2017 this worsened to £11.8m, in 2018 there was an improvement, but it still lost £5.0m.
Turnover in 2019 was only marginally ahead of that in 2018 which stood at £446m. The 2019 loss before tax of £18.2m includes a £4.3m impairment to goodwill. Despite this, the group claimed it “continued to perform broadly in line with the wider network” in its annual results.
New and used car sales, of 5,591 and 8,520 cars respectively, were flat compared with 2018. However, the group stated used car profitability in 2019 had been hit by “ongoing market challenges”.
LSH Auto UK also reported that net liabilities had jumped to £29.9m at the end of 2019 against £11.0m a year earlier. It added that it had obtained commitments from its parent firm “to provide the necessary financial support to ensure the company is able to meet its financial liabilities as they fall due for a period of at least 12 months”.
The group raised £50m through a share issue in July this year.
Commenting on the impact of Covid-19 this year, writing in the annual report, LSH UK boss Martyn Webb, said: “It is expected there will be a significant reduction in performance for at least the next 12 months.”
It added “there could be a material adverse change in the value of some assets on the balance sheet, for example goodwill of £45.2m and right-of-use assets of £112.5m as a result of future impairment”.
Despite several requests for further comment by Auto Retail Agenda, LSH did not respond.