Lookers motors ahead with expansion

Car dealership Lookers is revving up for an acquisition spree after a review of the business concluded that its best way forward was to expand.

The group, which successfully resisted a takeover attempt from a consortium in June, looked at whether owning both a parts and car retail business was its optimum structure, but has now decided to expand by acquisitions rather than try to initiate a sale or partial break-up.

Chairman Phil White said the group would make purchases using its current financing facilities, while selective sale and leasebacks of some properties would free up more funds.

Lookers, which owns the Taggarts brand in Scotland and Charles Hurst in Northern Ireland, lent heavily on its parts business in the first six months of 2011 as a rise in the number of cash-strapped motorists retaining and repairing their cars offset plunging new car sales.

Profits overall were just short of last year's first-half record at 21.3 million even though new car sales tumbled by 12.7 per cent. Revenues rose by 1.4 per cent to 1 billion.

The Manchester-based firm - which operates 119 dealerships selling marques such as Land Rover, Ford, Vauxhall, Nissan and Toyota - outperformed the new car market overall, which was down by 18.1 per cent. Used cars and aftersales helped offset the new car decline.

The parts division lifted profits by 3 per cent to 7.1m, with vehicles aged over four years the main impetus as people kept their cars longer, Lookers said.

The operation - which consists of three companies, FPS, Apec Braking and BTN Turbo - increased revenues by 7 per cent and the group expects a strong performance over the rest of the year as it is subject to fewer fluctuations in demand than the new and used car businesses.

Debt almost halved over the period due to strong cashflow, while the interim dividend was raised by 33 per cent to 0.8p.