Inchcape saw profit before tax rise by 10.1% to £126.8 million for its half year results for the period ending June 30, 2011, despite a drop in sales and operating cashflow.
Reported sales were down from £3.1 billion to £2.9bn, a 5.3% drop in actual currency and down 6.7% in constant currency. Operating cash flow fell from £104.5m to £73m.
A tight control on overheads saw costs reduced by 8.6% in the first half of the year. The strength of Inchcape’s international portfolio helped its financial performance. Inchcape’s aftersales operations performed well, providing 50% of the group’s gross profit for the six month period.
Inchape's retail segment delivered trading profit of £51.1m, up 23.5% in constant currency and 25.9% at actual rates of exchange. The business performed better than expected in the UK while its Russian and Emerging Markets businesses delivered strong trading profit growth.
André Lacroix, Inchcape chief executive, said: “We have delivered a good performance in the first half of the year which is a testament to the strength of Inchcape’s unique business model and differentiated Customer 1st strategy.
“We have benefited from increased consumer demand for premium and luxury vehicles in Russia and the emerging markets and our operational discipline on both commercial and cash initiatives has enabled us to deliver a healthy growth in profit before tax of 10.1% and earnings per share growth of 14%.”
Lacroix said Inchcape’s position continues to improve due to its operational focus on five priorities – growing market share, growing aftersales, improving margin, controlling working capital and selective capital expenditure investment.
He said: “While in some of our markets we will continue to experience a temporary supply restriction on new cars as a result of the earthquake in Japan, we believe the group will deliver a solid performance for 2011, in line with our expectations.
“We have taken cost actions to offset the supply impact and the group will continue to benefit from its broad geographic spread, strong portfolio of the world’s leading brands in the premium and luxury segment as well as from its strong aftersales business which represents around 50% of group gross profit.
“More broadly, we expect the uneven global economic recovery will continue as inflationary pressure and government austerity measures will affect consumer confidence, particularly in the UK and Europe. However, Inchcape is uniquely positioned worldwide as a leading international automotive distributor and retailer with two thirds of our trading profit coming from Asia Pacific and the Emerging Markets.”