31 July 2014

Despite a positive set of group global figures from Inchcape for the first half of 2014 and growth in UK sales, both trading profit and margin on its UK retail business fell in its latest financial statement.

Globally Inchcape plc saw sales rise 0.7% to £3.3 billion with pre-exceptional profit before tax up 10.3% to £162.1 million.

While UK retail sales were up 12.9% to £1.19bn, a fall in retail margin from 3.0% to 2.6% meant the UK retail operation saw a 6% drop in trading profits to £31.5m, compared to £33.5m in the same period last year.

Andre Lacroix, Group CEO of Inchcape, said he expected to deliver a solid performance in the UK in 2014 with the start of a vehicle margin improvement in the second half of the year. He added that a host of new model launches had seen strong like-for-like sales growth.

However, he admitted: “Notwithstanding this, trading margin declined in the first six months of 2014, in line with our expectations, impacted by the higher mix of vehicle sales and by competitive price pressure in the new and used car segments.”

Looking ahead Mr Lacroix added he expected demand in the UK to remain robust, reflecting the replacement of the car parc, the continued improvement in consumer confidence and OEM initiatives.

“Our UK retail business has developed the first online service booking system in the market, giving customers the ability to take complete control of their booking, including the reservation of a courtesy car. We now receive a significant number of service bookings per month through our websites.”

Inchcape was also planning to roll out live chat across all its UK websites this year.

In the half year financial statement Inchcape plc announced a 10.5% increase in interim dividend of 6.3p a share, up from 5.7p for the halfway point in 2013. This increase follows a 27.8% rise in earnings per share.

Inchape also revealed a further £100m share buy-back scheme for the next 12 months.

Commenting on the overall results Mr Lacroix said: “We are pleased to announce that Inchcape has again delivered a strong set of results during the first half of 2014 with a record profit before tax and double-digit earnings growth.

“Our retail segment delivered a resilient trading profit of £47.6m, down 7.6%, reflecting competitive pressure in some of our markets.

“We operate in the right premium markets and segments. We derive 90% of our profits from our close relationships with leading premium and luxury automotive manufacturer groups in 26 markets across the world.

“We are strong in small markets with distribution and selective in large markets with retail: 81% of our trading profit is derived from high margin distribution operations and 19% from selective investment in high quality retail markets.”

Tags: Inchcape, Lacroix