Things are looking up for car chain with sales and profits driving ahead

By KRISTY DORSEY
Published on 16/08/2012 00:00

STRONG sales in Scotland helped the Lookers chain of car dealerships post a record performance in the first half of the year.

The owner of the long-standing Taggarts brand in Glasgow and Motherwell made £24.1 million before tax, up by 6.6 per cent, on revenues which rose by more than 3 per cent to £1.03 billion. Sales of new and used retail cars were up by 11 per cent, with Lookers increasing its share in both markets.

Its 120 franchise dealerships include four newly-acquired Lomond Audi branches in Scotland, which were purchased for £15m in July and therefore did not contribute to the first-half figures. Lookers also has ten Taggarts dealerships which Andy Bruce, managing director of the motor division, described as performing “disproportionately better” than the overall group.

The latter benefited from a good mix of franchises, Bruce said, with particularly strong sales of Land Rover and Jaguar models.

Taggarts was also lifted by surprisingly resilient sales of new cars, particularly in Scotland where overall registrations were up 24 per cent, year-on-year, last month, according to recent industry data. Scottish sales growth has more than doubled that of the UK so far this year.

The motors division of Lookers, which takes in sales of new and used cars, made a record pre-tax profit of £21.1m, up more than 14 per cent on the previous half-year.

This more than offset a 1.5 per cent decline in the parts division, which distributes to independent garages that mainly service older cars. That market has been weak as drivers travel fewer miles and defer spending on non-essential work.

The group cut its debts to less than £27m and had more than £80m in unused banking facilities available at the end of June. It noted that it could also increase its term loan by as much as £30m to fund future acquisitions.

The firm wants to start selling BMWs, including the Mini range, to plug up what is seen as the last major hole in its range of premium brands. BMW models account for about 8 per cent of UK sales.

“We would also like in the fullness of time to expand with Audi,” Bruce added.

The purchase of Lomond marks Lookers’ first involvement in Audi franchising in the UK for many years, though it did buy a Dublin-based Audi business last year. Bruce said Lomond and Taggarts would give Lookers a combined Scottish turnover of about £300m.

“Now that we have got an even stronger foothold in Scotland, that does make it easier to bolt on other businesses,” he said.

Given the strong first-half performance, Lookers said it would increase the full-year dividend by 8 per cent. The interim dividend – held level with last year’s 0.8p payment per share – now represents about one-third of the total pay-out for the year.

Shares in Lookers, which is expected to post full-year profits in the region of £35m, closed up 1.75p or 2.6 per cent at 68.5p.