Lookers' profits in the fast lane

MOTOR dealer Lookers' new car sales for the six months to the end of June were up 13% while used car sales rose 16%. This drove underlying pre-tax profits up 7% to £9.8m on a 12% rise in turnover to £576.4m.

A £16.7m gain from reclaiming overpaid VAT lifts profits to £26.1 million. The interim dividend rises 21% to 4p.

The group is not overly concerned by a potential slowdown in new car sales it would be at least partially offset by its used cars and after-sales business.

Last month, a warning by Reg Vardy chief executive Sir Peter Vardy that new car sales slowed during the second quarter of 2004 put the skids under the motor dealership sector.

David Dyson, Lookers' finance director, agreed with Vardy's assessment, saying a very strong first quarter was followed by a slightly weaker second quarter, 'making the first half (of 2004) pretty good but not as good as it was looking after the end of (the first quarter).'

In June, however, the markets 'were ahead and the pundits predict that it (the market in 2004) will be either slightly above or slightly below last year's record levels. But you can't have a record level of sales year after year after year,' Dyson said.

'We have the strong back of our used car and after sale businesses so if new car market slows down a few percentage points we're not overly concerned,' he added.