(Reuters) - Car dealership Lookers Plc (LOOK.L) on Wednesday posted a steep drop in first-half profit and said it sees higher costs over the next several years, as it carves out a plan to fix some issues it found in its sales practices.
The company said it would make a one-time cash investment of about 10 million pounds over 2019 and 2020, with annual costs rising thereafter.
Lookers said costs would rise by about 3 million pounds per year from 2020 for a plan that will include a review of its past business, establish a revised sales process and put in place new quality checks.
The company had said last year that it found “some control issues” in its sales practices during an independent review of its internal control and audit processes, details of which it then shared with the Financial Conduct Authority (FCA).
The FCA’s investigation into Lookers, which sells vehicles for manufacturers including Volkswagen (VOWG_p.DE), Ford (F.N) and BMW (BMWG.DE), will examine the company’s sales processes between January, 2016 and June, 2019.
Lookers, which has also been hit as stricter emissions regulations, Brexit uncertainty and more consumers shifting to electric or hybrid vehicles dent car sales in Britain, posted a 27.5% drop in first-half underlying pretax profit to 29.2 million pounds.
“Our performance for the first half reflects an ongoing backdrop of challenging UK market conditions for the sector,” Chief Executive Officer Andy Bruce said.
Reporting by Shashwat Awasthi in Bengaluru; Editing by Bernard Orr