Motor dealer Lookers (LON: LOOK) outperformed the UK car market in the third quarter and pre-tax guidance has been increased to no less than £75m.
Last year’s pre-tax profit was £90.7m, but that benefited from government assistance and a strong used vehicle market. However, a lack of available new cars to sell is holding back the performance of all motor dealers.
The new car market was flat in the third quarter even though it grew by 4.6% in September. Lookers grew volumes by 5.5% in the third quarter. Used vehicle volumes declined by 7.1%. Aftersales revenues are growing.
Net cash was £86m at the end of September 2022. The total dividend is expected to be 3p a share. A £15m share buyback programme has been launched.
The Lookers share price has recovered in recent weeks and it has risen a further 6.1% to 75.3p. That values the shares on five times prospective 2022 earnings. There have been slight upgrades in 2023 figures, but profit is still expected to fall to £57m, increasing the multiple to seven.
The forecast yield is 4% and there is potential for a growing dividend.