11:56 am, July 30, 2024
Inchcape has announced a ‘resilient’ half-year set of results as it accelerates its move away from automotive retailing to becoming a distributor.
The business told the London Stock Exchange this morning (Jul 30) that it finished the first half of the year with revenue reaching £4.7bn – a 4% change on the same period in 2023.
Meanwhile, operating profit came to £276m (£299m adjusted), up from £274m the year before (and up by £4m on adjusted figures), while adjusted operating margin dropped from 6.5% in H1 2023 to 6.3% in H1 2024.
Inchcape finish the first-half with a profit before tax figure of £195m – a 10% improvement on the same period last year – while adjusted it came to £226m (up 1% on the H1 2023).
APAC regions contributed to 32% of the company’s revenue and adjusted operating profit for this region was up by 41%.
Europe and Africa (34% of revenue) had and adjusted operating profit up 25%, while the Americas saw adjusted operating profit fall by 24%.
The results came as the business begins to move away from the automotive retail sector and on to becoming a distributor.
Aș previously reported by Car Dealer, on April 15 Inchcape announced it was to sell its UK retail operations to US giant Group 1 Automotive for £346m.
In the half-year results, Inchcape said the divestment to Group 1 is expected to complete during the third quarter.
The business also announced an increased share buyback programme of £150m, with an interim dividend per share of 11.3p. It’s expected to commence on August 1, 2024 and end during Q1 2025.
Operational highlights during H1 included Inchcape winning four distribution contracts.
Duncan Tait, group CEO, said: ‘With the disposal of our UK retail business, Inchcape will become a pureplay operator, focused on automotive distribution, which is capital light, highly cash generative, higher margin and higher returns than pure retail businesses. This represents a significant strategic step in our journey to becoming the leading global distribution partner for our OEM partners.
‘We are pleased to announce an increased buyback programme of £150m, with an accelerated timeline starting immediately. This increase is a demonstration of our disciplined capital allocation policy in action, and reflects the group’s strong financial position, following an excellent free cash flow performance in H1 2024.
‘Inchcape delivered a resilient performance in H1 2024, with a strengthening balance sheet, reflecting our scaled and diversified growth portfolio. We delivered strong organic revenue and profit growth, with further high levels of cash generation and returns.
‘Our success in winning new Distribution contracts continued during the first half, with four contracts awarded in the period. These contracts, along with our investment in acquisitions, will continue to support the business as we grow in existing markets by building market share, expand into new markets and develop our OEM partner portfolio to drive growth.
‘With our global market leadership position and our differentiated digital and data capabilities to support our OEM partners, our distribution platform is well positioned for the future. To that end, we reiterate our growth expectations for FY 2024 and remain confident about the medium to long-term outlook for the group.’
Looking ahead, Inchcape said: ‘We maintain our expectations for moderated growth in FY 2024, at constant currency.
‘Over the medium to long term, the group is expecting to return to higher levels of growth, compared to FY 2024, driven by an anticipated recovery across a number of markets, the contribution from distribution contract wins achieved in recent years, bolt-on acquisitions and supported by the on-going development of Inchcape’s technology capabilities and the group’s continued focus on cost management.’
