Lookers puts Toyota fears on back-burner as it returns to profit

Published on Tuesday 9 March 2010 20:17

CAR dealer Lookers has sharply revved up its performance so far in March and yesterday played down industry fears about a dramatic recall of vehicles by Toyota.

Chief executive Peter Jones also said the big debt reduction at Lookers meant that "although the money is not burning a hole in our pocket it might be a good time for one or two opportunistic acquisitions".

The group – which owns Taggarts in Scotland – said that by 1 March it had 38 per cent more orders than it had for the whole of March last year.

This month is one of the busiest for car dealers when a new registration letter is introduced.

Jones added: "So quarter one looks to be in a very good place, despite the fact there are obviously economic challenges there."

The company said it planned to restore the dividend later this year after also revealing yesterday that it had bounced back into the black last year, mirroring the 2009 performance of rival Pendragon unveiled last month.

Jones said there had been little impact from a highly-publicised recall of cars by Japanese motor manufacturer Toyota over safety fears.

"The hysteria in some elements of the media, we're not finding with our client base at all," he said.

"We finished with a cancellation rate on Toyota of under 4 per cent through all of this piece. I think the Toyota situation will settle down fairly quickly."

Lookers has four Toyota dealerships and its cars account for about 4 per cent of group sales. The company, which also sells cars from manufacturers like Ford, Nissan and Vauxhall, said it would also look to add BMW/Mini and Audi dealerships in the coming year.

Lookers moved into Scotland in February 2003 with the purchase of Taggarts for 5.6 million.

Founded in 1896, Taggarts has sites in Glasgow and Motherwell, selling a range of marques including Jaguar and Volvo.

Despite posting a pre-tax profit of 11.5m against a loss of 14.9m in 2008, Lookers said it expected a continuing tough environment in 2010. Analysts say this is partly due to the ending of its scrappage incentive scheme for buying new cars later this month.

Jones said he expected the new car market to be broadly flat this year – but that Lookers had grown market share over the past two years, and he was upbeat about prospects for its key servicing and parts business.

Group like-for-like revenues grew 4.2 per cent to 1.75bn last year, while underlying profits, excluding exceptionals, doubled to 28.3m from 14m a year earlier.

The group's new car sales rose 13 per cent, while used car sales were up 6 per cent.

Lookers, whose rival Inchcape is due to publish its results today, raised 80m in a share sale last year to help cut its debt by 70.5m and its debt-to-shareholders-funds' ratio to 49 per cent from 180 per cent.