Lookers Plc (LON:LOOK) is the topic of conversation when Mike Allen, Head of Research at Zeus Capital joins DirectorsTalk. Mike shares his thoughts on the interim results, the key themes he noted, how this affects his forecast and thoughts on the current stock valuation.
Lookers, results summary for the six months ended 30 June 2017:
Financial highlights:
· Revenue increased 5% to £2.46 billion (2016: £2.34 billion) with growth from new and used cars, as well as aftersales
· *Operating profit from continuing operations increased 13% to £58.1 million (2016: £51.6 million)
· *Adjusted profit before tax from continuing operations increased 18% to £50.2 million (2016: £42.6 million)
· Profit before tax from continuing operations increased by 14% to £44.6 million (2016: £39.2 million)
· Profit before tax of £44.6 million (2016: £46.7 million)
· Earnings per share from continuing operations up 15% at 9.07p (2016: 7.90p)
· Increase in interim dividend of 10% to 1.41p per share (2016: 1.28p)
· Net debt reduced to £61.9 million (31 December 2016: £74.1 million)
(*Adjusted operating profit is operating profit before amortisation of intangible assets and share based payments. Adjusted profit before tax is profit before amortisation, debt issue costs, pension costs and share based payments)
Operational highlights:
· Continued investment in our multi-channel customer experience, especially the website, driving significant increases in visitor and enquiry levels
· New website to be launched by the end of this year to further enhance operational efficiencies
· Strengthened portfolio of franchise representation
· Growth in new car market in recent years underpins continued demand for aftersales, as the number of cars under three years old continues to rise
· A healthy order book for the delivery of new cars in September
Andy Bruce, Chief Executive of Lookers Plc, said: “I am pleased to announce an excellent set of results for the first half of the year with growth across all areas of the business. We continue to produce record levels of profit which is evidence of the success of our expansive and resilient business model.
We have made good progress with our strategy of having the right brands in the right locations with excellent execution and have managed our portfolio of dealerships to reflect that. Our order book for new cars for the important month of September is continuing to build in line with our expectations and the new car market for this year is still forecast to be at a historically high level. We therefore believe that the company is well positioned to continue its strong performance and deliver sustainable value to shareholders.”