Car dealership Lookers has upped full-year profit expectations after a strong third quarter helped it overcome supply chain constraints.
The London-listed group, which sells both new and used cars, conceded that the global shortage of semiconductors had continued to impact the supply and availability of new vehicles during the period.
Yet despite that, Lookers said it had outperformed the UK new car market – which fell by 31.1% in the three months to 30 September – by 3.4 percentage points.
Like-for-like used car sales fell 16.9% against strong comparatives but the slide was more than offset by “unprecedented” margin retention, Lookers said.
Looking forward, the group said its new car order bank remained above normalised levels, but there remained “material and increasing uncertainty” around car availability, which was expected to continue into next year.
However, it continued: “Notwithstanding this considerable uncertainty for the final quarter, given the strength of the performance in the period, the board now expects underlying profit before tax for 2021 to be materially ahead of its previous expectations.”
As at 1115 BST, shares in Lookers were ahead 4% at 62.92p.
Chief executive Mark Raban said: “The group has built on its record first half result and performance strongly in a challenging marketed, underpinned by further enhancements to its omni-channel experience.
“Although supply restrictions remain, we continue to work with our OEM [original equipment manufacturer] partners to minimise the impact.”
Sanjay Vidyarthi, analyst at Liberum, said: “We think consensus 2021 full-year pre-tax profits could increase by around 30% on the back of this update, although we would not expect this to flow through to outer years, assuming margins normalise.” Liberum has a ‘buy’ rating on the stock with a target price of 105p.”
