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Overseas growth boosts Inchcape’s performance

Inchcape half-year results showed a company making rapid progress overseas as a distributor and retailer, as well as outperforming as a retailer in the UK.

Although, like Pendragon, Inchcape has seen a sharp decline in UK used car prices, chairman Peter Johnson said he expected to be better insulated than most because premium marques had been less hard-hit.

“We also expect to benefit from the continued improvement in customer service and our focus on the value drivers in the business. We remain confident in our prospects for 2007,” he said.

Inchcape UK car sales business was up 5.1% in the first half on a like-for-like basis and by more than 90% when the Lind and European Motors Holdings acquisitions were taken into account.

Total trading profit was £35.8m for UK retail. Because of the used car weakness, the operating margin was a fraction down at 2.7%.

The company believes the second half will be strong this time because of key new models – Audi A5, Mercedes C-Class, BMW X5, BMW 3 Series coupe, Mini Clubman and Lexus LS 600H.

There is also still further scope for parts sales and finance and insurance penetration from the Lind and EMH business.

Surprisingly, the news of Ford’s intention to sell Land Rover and Jaguar did not harm sales.

Inchcape responded fast, put in a strong management team and the result was “extraordinary”. The two brands form a substantial part of the group of 44 “non-core” retail sites that the group put on the market in March after the EMH acquisition.

An Inchcape spokesman said there would be no rush to sell those franchised outlets while the two companies’ futures remained uncertain.

Elsewhere in the group, the exceptional performance has been in the emerging markets – especially Russia, the Baltics, Bulgaria and Romania. Sales grew by 137% at constant currency to £209m and the trading profit trebled to £12.4m at constant currency.

Group sales grew 31% internationally to £3.1bn with pre-tax profit at £124.8m.

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