Inchcape enjoyed a massive upswing in pre-tax profit last year to £296m that sent the figure back to pre-pandemic levels, it announced today (Feb 24).
It had already upgraded its pre-tax profit forecast last October to at least £290m, and releasing its results for the year to December 31, 2021, it said there was a 131 per cent rise on 2020’s figure of £128m, with an operating margin of 4.3 per cent.
The multinational automotive distribution and retail outfit said its strong performance for the year was a result of ‘robust consumer demand’ as well as high vehicle gross margins, especially in retail, which was mainly down to vehicle supply shortages.
The results, released via the London Stock Exchange, point to what’s to come from other car dealers across the industry, and follows the news of dealers coming under fire over their refusal to repay furlough cash and rates relief.
Inchcape’s revenue rose by 12 per cent to £7.64bn and operating profit doubled to £328m.
The dividend per share is going up by 226 per cent to 22.5p and Inchcape is also to launch a new £100m share buyback programme.
Group chief executive Duncan Tait said: ‘Inchcape delivered a strong set of FY21 results, with improved performance across all regions.
‘The combination of robust consumer demand and excellent operational execution, against the backdrop of supply shortages, drove our topline recovery and higher margins, enabling profits to rebound to pre-pandemic levels.
‘We are pleased to declare a higher full-year dividend, and reflecting the group’s highly cash generative business model we have announced another £100m share buyback programme.’
He added: ‘Our ambition is to extend our global leadership in automotive distribution, and to capture more of a vehicle’s lifecycle value.
‘Inchcape has a really exciting future, and is well positioned to deliver sustainable long-term value for all of our stakeholders through organic growth, market consolidation and cash generation.’
Among its operational highlights of 2021 was establishing the multi-brand, digital-first, used car platform Bravoauto, whose global roll-out will begin this year.
Looking ahead, Inchcape said its performance so far in 2022 had seen a continuation of last year’s trends, but there was still ongoing uncertainty over vehicle supply and the pandemic’s impact.
‘We expect the group to continue to make good progress with its strategic priorities in 2022. The strength of our business model and financial position means Inchcape is well placed to continue to grow profits and generate cash,’ its statement said.
Reacting to the results, investment banking operation Zeus Capital said the figures were ahead of most of its forecast expectations, adding: ‘We continue to believe Inchcape is well placed over the medium term, and believe the current valuation remains attractive to UK support services and global peers.’