In just two weeks, Lookers (LON:LOOK) successively announced the planned £120m disposal of its Parts division, a £55m acquisition, a fine set of interim results and, finally, another £27m acquisition introducing BMW/MINI to the group. All point positively to the future, yet the shares languish at 30% below their 12-month high and at a 45% P/E discount to the retail sector.
Interims ahead of expectations
As indicated in our pre-close update report, Lookers performed strongly in H116, lifting underlying PBT by 16% to £50.1m, ahead of our £48.5m target. This was achieved in a more challenging trading environment, with improved vehicle availability putting some pressure on margins. Consistent investment by management, especially last year’s acquisition of Benfield Motors, was the key factor. H2 trading will be affected by corporate activity, notably the earnings dilutive disposal of the group’s Parts division. We are leaving our full year estimate unchanged, but have reduced our 2017 underlying PBT target by £3m to £80m.
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