24th Aug 2022 11:18
(Alliance News) - Lookers PLC is performing strongly but uncertainty over the supply of new cars hangs over the stock, Peel Hunt said on Wednesday.
Revenue for the six months to June 30 rose 3.6% to GBP2.23 billion from GBP2.15 billion a year before, driven by increases in used vehicles and aftersales. Pretax profit slipped marginally to GBP49.9 million versus GBP50.4 million.
Profit performance was "underpinned by material improvement in new vehicle gross profit margin", the firm said. Lookers's margin strengthened to 12.7% from 12.0%.
Lookers said supply disruption during the half made trading conditions "challenging". Trading in July and August has been in line with expectations and the company has managed to maintain margins at first-half levels.
Its shares were trading 7.9% higher at 80.90 pence each in London late on Wednesday morning.
The firm also pointed to a retail order bank of 22,000 new vehicles, up sharply from 9,000 a year before.
Broker Peel Hunt commented on the results: "Gross margins remain high, reflecting supply constraints and operational initiatives, while inflationary pressures remain well-managed. The outlook for next year looks like more of the same."
However, this is not enough to drive upgrades given uncertainty over new car supply.
"The visibility on new stock deliveries and availability remains fairly volatile, largely a reflection of semi-conductor shortages," the broker said.
As a result, Peel Hunt left its full-year revenue forecast of GBP4.56 billion and adjusted pretax profit forecast of GBP63.3 million untouched.
"Looking into FY23, we expect supply constraints to remain a factor, which means that margins are also likely to remain above historical levels, helping to offset inflationary pressures," said Peel Hunt.
By Lucy Heming; [email protected]
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