UK motor retail group Lookers expects H1 2019 profit before tax to be £32m – a 25% year-on-year decline on last year’s £43m total.
In the company’s half year trading update, Lookers explained that trading in the three months to 31 March 2019 (Q1) had been positive, with growth seen in the new car, used car and aftersales markets.
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However Q2 proved more challenging for the firm, exacerbated by the falling demand in the UK new car market. In addition, weaker demand and the increasing pressure in the used car market caused the company to take a disciplined approach to managing stock.
A statement from Lookers read: “The board now expects that the more recent challenging conditions are likely to continue into H2, made worse by continued weakness in consumer confidence in light of wider political and economic uncertainty, and further pressure on used car margins.
“There is also the possibility of new vehicle supply restrictions as new emissions regulations come into force during Q3. In addition, the retail sector cost inflation experienced in H1 is likely to continue to impact earnings during the second half of the year.”
The trading update follows the recent announcement that the Financial Conduct Authority (FCA) would be investigating the firm for activities relating to its sales processes between 2016 and 2019.
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By GlobalDataThe Lookers board said that it had uncovered ‘certain matters requiring review’ in its 2018 annual report and accounts, which it then commissioned an independent review of in December 2018 which was shared with the FCA.
This revealed that there were some control issues in the sales process in the Group’s regulated activities which required attention, said Lookers in a statement.
“The FCA will reach its conclusions in due course and, at this stage, the company cannot estimate what effect, if any, the outcome of this investigation may have. The company is co-operating fully with the FCA in relation to this and will update the market further when appropriate,” the business said in its release.
