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Inchcape outperforming expectations

Inchcape has upgraded its forecast for year-end 2010 following third quarter sales that were better than expected.

"Our group financial performance for the full year is expected to be significantly ahead of previous expectations," said a stock market statement from the London-based international motor retailer this morning. 

The UK scrappage scheme and improved trading in Australia and Hong Kong propped up Q3 sales, while used car sales and aftersales kept gross margins robust.

André Lacroix, group chief executive, said: “Whilst we continue to experience an extremely challenging market environment, we have benefited in the third quarter from stronger than expected trading in several core markets.Andre Lacroix

"This demonstrates the benefits of our broad geographic portfolio, the strengths of our business model and the impact of our self-help measures implemented throughout the group.

“With increased share across our key markets, scale positions in established and emerging markets and industry consolidation opportunities in the medium term, we are confident that the group is well positioned to continue to outperform our competitors and to benefit from market recovery.”

Total revenue for the third quarter was 13.4% below last year in actual currency and 16.5% below last year in constant currency, but was 2.2% ahead of the second quarter in actual currency. Our like for like revenue for the third quarter was down against last year by 9.7% in actual currency and 13.7% in constant currency.

Inchcape said gross margin performance in Q3 has been "robust", with used car margins "solid" in several markets and aftersales, which represents half of gross profit, "resilient".

It said its cost base has benefited from the group restructuring programme that over the last twelve months reduced the workforce by 2350 jobs and closed 31 sites.

Strong cashflow generation has reduced finance costs for Q3, and Inchcape now expects to be "broadly debt-free" by the year-end.

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