Inchcape confirms UK site sell-off
25 July 2019
Inchcape has claimed the performance of its UK retail operation has stabilised thanks to the “optimisation of retail portfolio” and “improved stock management”. The announcement came as the group revealed its first-half results for 2019 to the stock market which confirmed the possibility of selling-off more sites.
Global results for Inchcape saw revenues rise by more than 2% to £4.725 billion, with profit before tax and exceptional items dropping 11.8% to £156.3 million on 2018 figures. Inchcape claims the profit fall was mainly due to supply issues in Australasia.
The recent sale in the UK of four VW operations to Group 1, two Audi to Motorline and one Audi to Harwoods generated £21m for Inchcape, however this amount falls in the second half of 2019.
Commenting on the UK business, Inchape’s chief executive, Stefan Bomhard said: “Whilst we are pleased with the broadly stable performance in the UK, given the pressures which persist in the market, we have embarked on our next phase of productivity improvements. As part of this review, we have looked to optimise our portfolio of retail centres in regions where we have a less concentrated presence and are less able to leverage costs efficiently. As a result, we have sold seven VW and Audi sites for cash proceeds of £21m. These sites in total were loss-making in 2018 and the valuation reflects book value of the assets. The disposals will complete in the second half with the corresponding cash received at this time. While there may be further opportunities to realise the value of less profitable sites, greater focus will be placed on accelerating initiatives to improve revenue and cost optimisation.”
While the group has stopped offering a breakdown of UK retail figures, revenue from Inchcape’s combined UK and European retail business was down 1.3% to £1.61bn for the first six months of 2019 with “trading profit” down 18.8% to £11.7m. Trading profit margin for the region was also down from 0.9% in H1 2018 to 0.7% in H1 2019. Inchcape defines ‘trading profit’ as underlying profit before central costs, exceptional items and net finance costs.