Lex accelerates as car sales pick up: Talk of 'significant progress' after 36% advance in group's underlying profits

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The Independent Online
LEX SERVICE, Britain's biggest motor dealer, has made the most of the recovery in car sales, posting a sharp rise in underlying profits in 1993, writes John Murray.

Profits before exceptional items leapt 36 per cent to pounds 38.5m on turnover 29 per cent higher at pounds 1.2bn. Pre-tax profits, at pounds 101.5m, were slightly lower than the previous year's pounds 107m, but the 1992 figures were distorted by an exceptional gain of pounds 83.7m from the sale of its US electronics business, Arrow.

Sir Trevor Chinn, chairman and chief executive, said: 'In 1993 we made significant progress in improving our profitability based on our twin goals of expanding the sale of the company and improving the quality of our operational performance.'

Lex comfortably outpaced the national growth in car registrations of 12 per cent last year, selling 64,000 new cars, a 30 per cent rise on a like- for-like basis.

The group increased its dealer network by 36 in July with the purchase of Arlington, which contributed pounds 800,000 to 1993 profits. Sir Trevor said its contribution would increase substantially this year as the benefits of its integration into Lex came through.

The Arlington acquisition pushed Lex's total share of the new car market up to 4 per cent. The group now has 127 car and truck dealerships.

Lex's leasing operations, owned jointly with Lombard North Central, also reported sharply improved profits. Sir Trevor said that 1994 had started encouragingly, with continued growth in the car and truck markets. 'We see continuing benefits from the increased scale of the company and from our new way of operating,' he added.

He said Lex aimed to continue expansion, both by organic means and through the acquisition of dealerships, import businesses and leasing companies. The dividend rises 18 per cent to 12.5p. The shares eased 6p to 524p.

Del Barrett, analyst at Albert E Sharp, said: 'Lex has produced a sparkling set of figures that justifies its decision to get out of electronics and concentrate on the core business.' Sharp is forecasting pre-tax profits of pounds 50m this year.