Inchcape today (Jul 29) announced that its pre-exceptional operating profit for the first half of 2021 soared by a whopping 468 per cent to £159m versus last year’s figure of £28m
Issuing its interim results for the six months to June 30, 2021, the global automotive distributor said pre-exceptional pre-tax profit rose from £9m during the first six months of 2020 to £143m this year.
Group revenue, meanwhile, was up by 30 per cent at £3.9bn.
It made a statutory operating profit of £78m versus a £169m loss in 2020, and a statutory pre-tax profit of £61m against 2020’s £188m loss, with this year’s figure largely reflecting the loss it made in shedding part of its Russian retail operations.
Announcing a new £100m share buyback programme, group chief executive Duncan Tait said today: ‘The group delivered a strong set of results in the first half, reflecting a good performance across all regions, higher margins and the ongoing benefit of our overhead reduction programme.
‘The group’s inherently cash-generative business model saw a further strengthening of our overall financial position.
‘At the height of the global pandemic, our efforts were focused on protecting our people, collaborating with our partners and ensuring the resilience of the business, and we accordingly prioritised and successfully completed a major cost restructuring programme.
‘We have since been able to turn our attention back to capturing growth opportunities across our markets, and I am delighted to report that we expanded our distribution footprint in two new markets in Asia and Americas.’
He added: ‘Looking ahead, whilst there continues to be a high level of uncertainty, both in terms of the pandemic and widely reported issues relating to supply, we expect that the strong first-half performance – which in part reflected pent-up demand – will underpin our full-year results and expect to deliver FY21 profit before tax of at least £260m.
‘Our ambition is to become the undisputed distributor of choice for OEMs.
‘We will achieve this by further strengthening our OEM relationships and with more emphasis on capturing the lifetime value of both customers and vehicles.’
Today’s interim results coincided with Inchcape announcing a global strategic partnership with Geely Auto, starting with a market distribution agreement for Chile.
Inchcape said the partnership would be a long-term relationship and developed on a country-by-country basis.
‘This is an exciting opportunity for both Inchcape and Geely,’ commented Tait.
‘Inchcape’s purpose is to bring mobility to the world’s communities for today, for tomorrow and for the better.
‘In that context, Geely’s innovation, exemplified by its strong product development in gasoline, hybrid and electric vehicles, will play an important part in meeting consumer demands, sustainably.’
He added that Geely would benefit from Inchcape’s focus on digital, data and analytics.
‘We look forward to working with Geely to deliver high-tech and high-value-add vehicles that benefit from their strengths in automotive design, intelligent manufacturing, R&D and quality control.
‘Inchcape’s well-established presence and deep understanding of the Chilean market will serve as a good starting point for our strategic co-operation and we look forward to bringing Geely vehicles into more markets.’
Lin Jie, senior vice-president of Geely Auto Group, said: ‘Thanks to our new generation of products and the successful transformation of our overseas operation strategy in recent years, Geely Auto achieved a new breakthrough in sales volume in eastern Europe, the Middle East and Asia-Pacific markets.
‘It also succeeded in a comprehensive breakthrough and upgrade in brand cultivation. In the period from January to June, Geely Auto has exported 53,422 units – up 173 per cent year on year.
‘Considering that Inchcape has been operating mainstream brands in Chile for many years, boasting a professional team, rich experience in market operation and modern management systems, our joining hands in the Chilean market is bound to be a win-win co-operation, which convinces me that a new chapter will be written by Geely in Chile.’
Inchcape will be issuing a trading update for the third quarter on October 28.
It will also be holding a Capital Markets Day on November 17 in which Tait said it would share more details about its strategy and future growth prospects, including the ‘significant untapped potential’ it sees in capturing more of a vehicle’s lifetime value.
The aim of the share buyback programme – running from August 2, 2021 to no later than February 18, 2022 – is to reduce the capital of the company.