A weak share price reflects fears about a post-Brexit economy rather than current trading, which remains on course. The challenge may again be formidable, but there are opportunities that a strong management team can use to demonstrate the quality of the group’s earnings.
Another good half-year expected
The vibes for the first half of 2016 are positive: new car registrations were up by 4.1%, including 3.2% in retail, over the first five months of the year; the used car market is indicated also to be slightly better; the aftermarket, especially in the 0-3 year-old segment, is also usefully higher. Lookers' (LON:LOOK) May trading statement reported Q1 gross profits in these segments of the business to be ahead by 23%, 23% and 25%, respectively. While these figures are inflated by the impact of last year’s £85m Benfield Motors acquisition, the 5% rise in like-for-like gross profits is a useful guide for performance. The Parts division also reported steady progress, despite ongoing challenging conditions. Interim results, due to be announced in mid-August, should show sound progress. To be on course to deliver our full-year estimates, we look for H116 revenue of £2.2bn, with underlying PBT up by some 12.5% to £48.5m
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