Global car distribution and dealership owner Inchcape has revealed profits tumbled in 2020 as the pandemic bit.
Inchcape – which operates distribution businesses in Asia, Australasia, Europe, America and Africa – reported profit before tax and exceptional items of £129m for the year, down 61 per cent on 2019.
However, after booking £257m exceptional charges, the majority against the goodwill of businesses and the loss in value of sites, Inchcape swung to loss before tax of £128m – compared to a profit before tax of £402m in the previous year.
The firm – which operates dozens of dealerships in the UK – generated revenues of £6.8bn during the year, down 27 per cent on the £9.3bn it bought in the previous year.
Inchcape has promised to resume dividend payments, though, with a proposed 6.9p payment for 2020 as it revealed its full results for 2020 to the Stock Market this morning.
Group CEO Duncan Tait said: ‘Our 2020 results came in ahead of recently upgraded expectations, supported by increased resilience of demand for both vehicles and aftersales services in the fourth quarter.
‘While the Covid-19 situation remains dynamic, as of today almost all of our markets are open.
‘In many markets where we are facing restrictions, we are able to deliver vehicles, offer a click-and-collect service and to continue to perform aftersales services.
‘These capabilities helped our top-line performance in the second half of 2020 and contributed to the operating margin recovery from the first half.’
Tait said Inchcape would look to further reduce the group’s retail portfolio as it continues to focus on the more lucrative distribution side of the business.
Inchcape sold a number of its businesses last year – the headline sale being a number of its Cooper BMW sites to Vertu.
Such is the businesses change in direction, the London Stock Exchange reconsidered the group’s sector classification last year – changing it from ‘speciality retail’ to ‘business support services’
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Reflecting on 2020, Tait added: ‘We continued to rebalance our portfolio towards the more attractive distribution segment, securing new distribution business in both Americas and Europe, and further reducing our retail business.’
Revenue for the group’s retail operations were down 23 per cent year on year in the UK, Russian and Poland.
Inchcape says it accepted £23m of government support in the UK, but was ‘nevertheless still heavily loss making’.
The company said: ‘We have not accessed any such support in the second half.
‘Performance improved in the second half as we experienced higher vehicle gross margins and the benefit from our cost-restructuring efforts.
‘We finished the year with operating profit of £25m vs £32m in the prior period, which included profits from businesses disposed in December 2019, including Inchcape Fleet Solutions, and slightly higher margins than 2019.’
Mike Jones, the compiler of the Car Dealer Top 100 list of most profitable dealers in the UK, and executive chairman of accountants ASE Global said the results show Covid-19 has hurt the business.
He said: ‘Inchcape has been hit globally by the pandemic and this is reflected in the results.
‘On a strategic level we can see the switch in Inchcape’s focus as it has moved from being classed as a Speciality Retailer to Business Support Services by the LSE.
‘Looking to the future, Inchcape is to concentrate around the two key growth pillars of distribution and vehicle lifecycle services, adopting a “distribution focussed growth strategy” going forwards.
‘As has been the case recently there is limited disclosure of UK retail performance, which benefitted from £23m of furlough support to produce a flat operating margin percentage year-on-year.’
Accounts for Inchcape Retail were only filed last week for 2019 and revealed a loss of £6.6m for the division.
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