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Inchcape reports decline in margins in 2014 interims

A higher mix of vehicle sales and price pressures have been given as the causes of a decline in trading margin by Inchcape today on the release of its interim results for the first half of 2014. A trading margin of 3% was down 0.3% for the same period last year.

For its retail business the fall is from 2.6% from 3%.

It meant trading profit was at £37.4 million for the group compared to £38m to June 30, 2013. For its retail business the figure was £31.5m (2013: £33.5m).

Trading margin declined by 30 bps in the first six months of 2014, in line with our expectations, impacted by the higher mix of Vehicle sales and by competitive price pressure in the new and used car segments.

UK sales totaled £1.3 billion (£1.14bn), a 9.8% improvement and on a like-for-like basis £1.2bn compared to £1.1bn, a 12.7% increase.

Group chief executive Andre Lacroix said: "The first half of 2014 has seen a continuation of both strong market growth driven by an acceleration of the replacement cycle, sustained high level of consumer confidence and attractive price offers in all segments.

"We have delivered a strong like-for-like sales growth of 12.7%.

"This strong revenue growth was driven by the successful launch of new models – including the BMW 2 and 4-series, Jaguar F-Type coupe, Mini three-door hatch and the Mercedes-Benz GLA – and by our digital service innovations such as helping customers search for the right model to suit their lifestyle.

"We have also seen strong growth in aftersales hours sold as we reap the benefits of our investment in our customer contact centre to capitalise on the strong car parc growth in the UK.

"Notwithstanding this, trading margin declined in the first six months of 2014, in line with our expectations, impacted by the higher mix of vehicle sales and by competitive price pressure in the new and used car segments."

On the remaining of 2014, Lacroix said: "In the second half of the year, we are well placed to drive market share growth with the launch of several exciting new models from our brand partners and we also plan to differentiate our customer service with innovations such as ‘Live Chat’ across all our UK websites.

""In terms of the new car market, we expect demand in the UK to remain robust, reflecting the replacement of the Car Parc, the continued improvement in consumer confidence and OEM initiatives.

"We continue to expect to deliver a solid performance in the UK in 2014 with the start of a vehicle margin improvement in the second half of the year."

Inchcape Plc's UK interim results to June 30, 2014



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