8:31 am, April 27, 2023
Global automotive distributor Inchcape enjoyed a strong start to the year despite agency sales ‘adversely impacting’ growth, bosses have said.
In a trading update for the first quarter published via the London Stock Exchange this morning, the firm revealed its global revenues rose by 50 per cent on a year-on-year basis to £2.7bn in the first three months of 2023.
The figure was significantly boosted by new businesses, purchased in the Americas, including the likes of Derco, Simpson Motors and Ditec.
Analysis shows that Inchcape is currently on track to meet its targets for the year, with experts backing the outfit to make a pre-tax profit of £487m.
‘Inchcape has made an excellent start to 2023,’ said Duncan Tait, group CEO.
‘Our first quarter results show a continuation of the trends we experienced at the end of last year, with organic growth underpinned by the improvement in vehicle supply.
‘Growth in the distribution segment was further accelerated by the significant contribution from new businesses in the Americas – with Derco, Simpson Motors and Ditec all contributing positively.
‘I am especially pleased with our progress in integrating Derco, and we remain firmly on track with our plans.’
- Inchcape racks up 50 per cent increase in pre-tax profit to £373m thanks to ‘robust consumer demand’
In recent times, Inchcape, which also has franchised dealerships in the UK, has been attempting to shift the group’s portfolio towards distribution, as opposed to retail.
With that in mind, bosses have been hard at work expanding its footprint, especially in the Asian-Pacific marketplace.
‘This included agreeing a deal to handle Mercedes-Benz’s operations in Indonesia and acquiring CATS, which is the leading distributor of luxury vehicles in the Philippines.
The push has seen a 70 per cent rise in distribution revenue to the end of March with growth in all key markets.
- Inchcape expands presence in Indonesia as it buys Mercedes-Benz’s business in the country
- Inchcape expands Asia-Pacific business with CATS Motors joint venture
Elsewhere, in retail, revenue grew by a ‘robust’ eight per cent. Inchcape’s report states that the figure would have been higher but for a switch towards agency sales for several of the brands it represents.
Tait added: ‘During the quarter we continued to shift the group’s portfolio towards distribution, expanding our footprint in APAC.
‘This included Mercedes-Benz’s operations in Indonesia and an agreement to acquire CATS, the leading distributor of luxury vehicles in the Philippines – another new and exciting high-growth market for the group.
‘The combination of our broad market footprint, strong OEM relationships, our digital and data capabilities and our robust financial position continues to make Inchcape the natural consolidator in a highly fragmented industry.
‘Inchcape is a business with great momentum and an exciting future.
‘With a clear and proven strategy, we are well-positioned to capitalise on further opportunities for organic growth and market consolidation, and I am confident we will continue to deliver sustainable growth and long-term value for all our stakeholders.’
Responding to the report, automotive finance experts Zeus Capital said: ‘Inchcape’s Q1 2023 trading statement shows a strong start to the year.
‘The Group expects adjusted PBT for FY23 to be in line with consensus estimates (£487m), which is in line with our forecast.
‘We think Inchcape shares are undervalued. Our SOTP analysis suggests a value of 1,258p per share, offering 65 per cent upside.’
