Lookers

LN: LOOK

£174.8m market cap

44.9p 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 strengthened its position in FY18 and is now the second largest UK new car retailer. FY19 remains challenged but the strategy looks appropriate as high organic investment comes to an end, improving cash flow from FY20. However, Lookers announced on 25 June 2019 that an independent review of its controls and processes of its activities regulated by the Financial Conduct Authority (FCA) has led to an investigation by the FCA of the company’s sales processes from 1 January 2016 to 13 June 2019. As the precise issues and potential outcomes are unclear to us at present, we have withdrawn our estimates for now but will update them shortly.

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 3.2 2.7
2018A 4879.5 106.2 67.3 14.02 3.2 1.4
2019E N/A N/A N/A N/A N/A N/A
2020E N/A N/A N/A N/A N/A N/A
Last updated on 18/07/2019
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 18/07/2019
Sector
Industrials
Share price graph
Balance sheet
Forecast net debt (£m) 66.7
Forecast gearing ratio (%) 17
Price performance
%
1m
3m
12m
Actual (37.7) (51.7) (57.6)
Relative* (38.2) (51.8) (56.2)
52-week high/low 111.6p/42.5p
*% relative to local index
Key management
Phil White Chairman
Andy Bruce CEO
Robin Gregson FD