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Summary
- The firm’s revenue sharply dropped by 40 per cent during the first half of 2020.
- It recorded an underlying loss before tax of £36.1 million during the period.
- Nevertheless, its 'Click and Drive' programme is making steady progress.
UK-based motor retail and aftersales company Lookers Plc (LON:LOOK) delivered its trading performance for the first half of 2020 on Friday, 29 January. The auto retailer’s revenue dipped by 40 per cent to £1,563.7 million during the H1 of 2020 (H1 2019: £2,605.1 million) as nationwide lockdowns led to closure of significant number of its stores. The company witnessed modest trading performance in both used car sales and aftersales.
(Image Source: © Kalkine Group 2021)
The pandemic has weighed down heavily on the auto sector. In order to survive through the unprecedented crisis, the company planned restructuring, which resulted in 1,500 job redundancies and closure of 12 sites in 2020. The restructuring changes shall get reflected in 2021.
Also read: UK Car Industry to Suffer with The Economic Fallout of Lockdown 2.0
Despite cost control measures in place, the company recorded an underlying loss before tax of £36.1 million during the first half of 2020. However, the company managed to downsize its net debt to £11 million on 30 June 2020 driven by strong working capital and cost control along with the benefits of deferred VAT and insurance payments agreed under government schemes.
The company board is trying to restore its shares to the premium listing on the London Stock Exchange. The company is expected to lose revenue due to store closures due to the third national lockdown in the country. However, the Click and Drive programme launched by the company is making steady progress.
The car manufacturing has also gone down as the pandemic continues to pose challenges for the sector. According to a survey, nearly 45 people are working remotely. Thus, the need for cars for travelling to work has nearly diminished.
According to a SMMT report, the car manufacturing output of the UK is at the lowest since 1984, plunged by 30 per cent to 920,928 units in 2020.
These figures paint a very gloomy picture that reflects the catastrophic impact of the pandemic on the UK automotive sector. The pandemic-induced lockdowns and disruption of Chinese supply chain has led to closure of plants, depressed demand, and job losses.
As Britain left the European Union on 31 December, the sector is vulnerable to supply chain disruptions. However, the sector outlook is positive in 2021. The UK has turbocharged its vaccination programmes to curb the spread of the awful virus. The UK’s automotive sector is awaiting a trade deal with Europe, which shares a rich history in the development of the auto sector. The migration to cleaner technologies in a cost-effective manner remains a big challenge for the industry in the wake of reducing carbon emissions.
