18th Oct 2022 11:32
(Alliance News) - Lookers PLC on Tuesday announced a share buyback as its cash position surged after outperforming the wider UK market in the third quarter, boosted by September sales.
Despite supply chain strife continuing, Lookers outperformed the market by roughly 5.6%, it said, citing its "omnichannel customer experience strategy". The total UK new car market declined by 0.1% in the third quarter.
In September, new retail unit sales grew 12% against the UK new retail car market climbing by just 4.6%. Chief Executive Officer Mark Raban noted that September always is a key month for sales, as a new registration plate is issued.
Like-for-like used-vehicle unit sales fell 7.1% in the third quarter but were however offset by better margin retention and finance sales. The firm emphasised how the fall was milder than the 8.3% decline in the first half of 2022. Like-for-like aftersales revenue in the third quarter was higher than a year ago.
"Global supply chain disruption continued throughout the period, impacting the supply and availability of both new and used vehicles. Vehicle gross margins remained broadly in line with those reported in the first half. The group continued to face significant cost inflationary pressures, partly offset by improvements in operational efficiency and a continuing focus on working capital management," Lookers said.
The company now expects underlying pretax profit of no less than GBP75 million for 2022, ahead of previous expectations, but down from GBP90.1 million in 2021.
Lookers also announced a share buyback programme of up to GBP15 million, noting that its share price's current discount to its cash and property portfolio valuation "represents an attractive investment opportunity". Lookers said that value rose to 98 pence per share as of September 30 from 78p on December 31.
Lookers shares were 6.3% higher at 75.46 pence each in London on Tuesday morning.
The buyback also supports the company's progressive dividend policy, it said. Lookers as of September 30 had net cash of around GBP86 million, multiplying from GBP33 million a year prior.
Looking ahead, Lookers said: "Although we are pleased with the recent positive trading performance, the availability of new vehicles continues to be a factor limiting our growth. We are also cautious on how consumer spending might be affected during the remainder of this financial year, with inflation, higher interest rates and wider economic uncertainty."
CEO Raban commented: "We have built on the strong first half trading momentum, particularly in the important month of September with the arrival of a new registration plate. We remain mindful of ongoing supply chain disruption and significant inflationary pressures affecting consumers and businesses alike. However, our intense focus on driving self-help operational efficiencies across the business and ensuring ongoing strong vehicle margin retention means that we are increasing our profit expectations for the full year."
By Tom Budszus; [email protected]
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