Lookers profits crash as Britain’s car sales stall
Profits at car dealership Lookers slumped in the first half of the year as sales of new vehicles in Britain continued to decline.
Profit before tax dropped 39.7% to £24.9 million in the six months to June 30.
In the same period, revenue rose 2.7% to £2.65 billion.
New car sales were down 1.2% on a like-for-like basis, though this was still stronger than the market average of a 3.4% decline.
Chief executive Andy Bruce said restructuring efforts are under way, with about £10 million in one-off investments being ploughed into future growth.
“Our performance for the first half reflects an ongoing backdrop of challenging UK market conditions for the sector,” he said.
“Whilst we are reporting lower profits year-on-year, we have made good progress on a number of strategic initiatives and have a clear investment plan to restructure and strengthen our regulated activities.”
The decline in profitability was flagged last month, when the company said it was expecting underlying pre-tax profits to be lower due to the increasingly challenging backdrop of declining car sales.
Adding to the group’s woes is an investigation by the Financial Conduct Authority (FCA) into its sales practices, which was announced in June.
Ed Monk, associate director from Fidelity Personal Investing’s share dealing service, said: “The market for new and used cars is stalling because buyers appear to be putting off purchases as economic news gets worse.
“Drivers may also be waiting for more clarity over the status of diesel cars, sales of which have collapsed due to fears of stricter regulations on vehicles that use the fuel.
“In the face of all that, buyers are sitting on their hands and prices on forecourts have been tumbling this summer, and that’s felt directly on Lookers’ bottom line.”
Shares crashed following the initial warning in July, but were flat on Wednesday.