Lookers

LN: LOOK

£336.6m market cap

86.5p last close

Lookers is vying to be the largest UK motor vehicle retailer, with its new car operations supported by the strength of used and aftersales activities. It operates 155 franchises, representing 32 marques from 100 sites around the UK.

Investment summary

Lookers continued to strengthen its position in the UK auto retail market in FY18 despite the various headwinds and is now the second largest new car retailer. FY19 is likely to remain challenged but the strategy looks appropriate as a period of high organic investment comes to an end, improving cash flow from FY20. We believe the generation of two thirds of gross profit from used cars and aftersales also provides a more resilient stream of profits. Our forecasts are under review, but Lookers remains rated for a major contraction of earnings, with no allowance for any market improvement.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2017A 4696.3 105.4 68.4 14.14 6.1 5.2
2018A 4879.5 106.2 67.3 14.02 6.2 2.8
2019E 4824.2 103.3 66.4 13.65 6.3 3.3
2020E N/A N/A N/A N/A N/A N/A
Last updated on 23/05/2019
Industry outlook

Market dynamics favour larger motor dealership groups against smaller independent groups, which still command c 60% of the franchise market. Global manufacturing overcapacity still points to OEM support, although market and buyer confidence is undermined by Brexit concerns, negative sentiment on diesel and PCP finance and new car supply disruption. Lookers is pursuing its strategy of focusing on the right brands in the right locations supported by appropriate levels of investment.

Last updated on 23/05/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 66.7
Forecast gearing ratio (%) 17
Price performance
%
1m
3m
12m
Actual (5.5) (17.6) (17.8)
Relative* (1.7) (18.0) (11.1)
52-week high/low 112.2p/85.3p
*% relative to local index
Key management
Phil White Chairman
Andy Bruce CEO
Robin Gregson FD