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Inchcape profits 'resilient' despite high site overheads and margin pressure

Stefan Bomhard

Increased investment in centres and reduced vehicle margins didn’t prevent Inchcape from achieving a “resilient” profit result in the last financial year.

Reporting on its 2016 financial year, Stefan Bomhard, group chief executive, said a “resilient profit performance in the UK was achieved despite high overheads caused by investments in our sites and operational processes to strengthen the long-term positioning of the business as well as lower new vehicle margin due to the competitive market environment”.

And a “sharper focus” on used vehicles and aftersales saw an improvement in results.

The business remains, he said, highly focused on “outperforming our competitors and crystallising the significant organic opportunities of our Ignite strategy”.

Ignite sees the dealer group focus on five strategic objectives: leading in customer experience, delivering the full potential from all of our revenue streams, becoming the OEMs' partner of choice, leveraging our global scale and investing to accelerate growth.

Bomhard (pictured) said in a statement this morning: "Inchcape is unique within its industry by being a global, independent and multi-brand automotive distributor and retailer.

“I believe our 2016 results demonstrate the strength of our business model as we sustained our track record of growth, converting a robust revenue performance into earnings growth and strong free cash flow.

“At the same time, we retained our disciplined approach to capital allocation with the proposed 14% growth in the full year dividend to 23.8p per share and completing the share buy-back programme we commenced last year demonstrating our commitment to driving sustainable shareholder returns.

“I am pleased with the progress we have made across all five elements of our Ignite strategy.

“More specifically, we achieved good growth in profits from used vehicles and aftersales, reflecting our focus to deliver the full potential of all revenue streams.

“We have improved our alignment and focus to become the OEM's partner of choice and shown the importance of these relationships with the Subaru and Hino acquisition in South America and entry into Thailand with Jaguar Land Rover.

“These moves demonstrate our ability to invest to accelerate growth and have seen Inchcape enter three new markets and take our global presence to twenty-nine in total.

“They are also indicative of the exciting opportunity for value-adding consolidation in what remains a highly fragmented industry.”

Ignite, he said, is enabling Inchcape to take “an even stronger leadership role in our industry, not just in terms of scale, but also ambition, vision and quality of service”.

“This is particularly important at a time when the global automotive industry is developing at pace, with customer purchasing behaviour and service expectations clearly changing.

“We remain highly focused on differentiating our proposition through customer service excellence. This is a constantly evolving field and we continue to innovate in our physical and digital capabilities,” Bomhard said.

Regional result highlights

  2016 2016 2016 2015 2015 2015
  Op/Trading profit Exceptional items Reported Op/Trading profit Exceptional items Reported
  £m £m £m £m £m £m
Asia 136.7 -11.6 125.1 133.4 - 133.4
Australasia 102.4 -5.2 97.2 90.6 - 90.6
Emerging markets 52.4 -0.9 51.5 41.8 -49.5 -7.7
UK and Europe 97.1 -36.7 60.4 88.9 - 88.9
Trading profit 388.6 -54.4 334.2 354.7 -49.5 305.2
Central costs -29.5 -27.2 -56.7 -30 - -30
Operating profit 359.1 -81.6 277.5 324.7 -49.5 275.2


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