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Inchcape's UK car dealerships report 10.5% rise in sales

Inchcape Toyota Derby

Inchcape has reported a 10.5% rise in revenues from its UK dealerships in the first half of 2015.

The global automotive group’s UK dealerships, operating under Inchcape Retail UK, saw turnover lift year-on-year to £1.36 billion from £1.23bn.

Trading profit rose 1.6% to £32 million, while trading margin dropped by 0.2ppts from 2.6% to 2.4%.

Inchcape Fleet Solutions, its UK leasing business, recorded a rise in sales of 47.6% to £34.1m and a 10.2% increase in trading profits to £6.5m, however trading margin at this operation declined 6.4ppts to 19.1% from 25.5% a year previously.

In its statement to the London Stock Exchange, Inchcape said: “The first half of 2015 has seen a continuation of strong market growth driven by the underlying replacement cycle, a sustained high level of consumer confidence and attractive price offers in all segments.

“Inchcape's brand partners continue to grow faster than the total market and we delivered strong (Inchcape Retail) like for like revenue growth of 10.3%.”

It said its ‘cross-brand’ online offering is having a positive impact on lead generation, with cumulative growth of 24% year-on-year to the end of the first half. Aftersales hours sold has also grown,  driven by investment in customer contact centres to capitalise on the growing car parc.

Inchcape said the deline in trading margin was “in line with our expectations”, impacted by the higher contribution of vehicles sales to its gross profit, lower used vehicle margins for some of its brand partners and increased amortisation costs following investment in its IT systems.

Property investments

It has also incurred costs from property investments in order to provide superior customer experiences, with new and refurbished facilities for Mini in Tonbridge and Audi in Crawley given as examples.

It has £7m worth of surplus property assets in the UK currently being marketed for sale.

“In the second half of the year, we are well placed to continue to drive market share growth with the launch of several exciting new and face-lifted models from our brand partners - such as Audi A4 and Q7, BMW 7 Series, MINI Cubman, Jaguar XF, Lexus RX, Mercedes-Benz GLC, Toyota Auris and the VW Touran.

“We continue to expect to deliver a solid performance in the UK in 2015.”

Globally, Inchcape has recorded a 1.3% rise in revenues from £3.3bn to £3.4bn, and a 5.6% lift in underlying operating profit from £150.7m to £159.2m, although profit before tax was down 5.6% to £153m from £162.1m.

Stefan Bomhard, Inchcape’s group chief executive, said: "The group has continued to grow both revenue and underlying profit in the first half of 2015, driven by our strong portfolio of high quality distribution and retail businesses in some of the most attractive segments of a global growth industry.

“We are benefitting from broad based growth across our value drivers, including our high margin aftersales where the new car growth of recent years is starting to translate into a growing, high-retention 1-5 year car parc in a number of our markets.

“While we have experienced challenges in some of our markets in the first half of the year, the proven resilience of our unique business model with its broad global spread, together with our operational rigour, continues to drive overall growth and attractive returns for our stakeholders. We continue to expect the group to deliver a robust underlying constant currency performance in 2015.”

Inchcape announced a further £100m share buy-back programme for the next 12 months.

Inchcape has operations in Australasia, Europe, North Asia, South Asia and the emerging markets including Russia, Africa, China and South America. The UK is its biggest market currently, accounting for more than a third of group revenues.

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