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Inchcape grows revenues despite 'broadly flat' UK H1

Stefan Bomhard

Inchcape has reported that its UK trading profit was “broadly flat” as its global distribution operation helped the business bolstered revenue growth in the first half of 2017.

The global franchised dealer and vehicle distribution business cited its Ignite strategy, which will target increased aftersales and used car performance in the UK, in a set of global H1 results which showed revenue of £4.5 billion, up by 18.7% at actual rates on the previous year and up 9.5% at constant currency, with retail trading profit up 8.1% to £6.3 million.

But while Inchcape’s statement said that it expected a UK and Europe region which had seen a 5% overall rise in trading profit (%54.6%) to September 30th not reflected by the UK market, the focus lies away from new vehicle sales.

Overall, Inchcape’s retail business delivered a trading profit of £60.3 million, up 12.9% in actual currency and 8.1% at constant currency, the statement said, adding: “The UK New Car market declined in the first half by 1.3%, with a first quarter growth of 6.3% and a second quarter decline of 10.3%”, it stated, adding “Consistent with our Ignite focus of delivering the full potential on all of our revenue streams we delivered solid growth in aftersales in the UK.

“The business undertook a detailed review of constraints to aftersales capacity in the first half and launched a recruitment drive for new technicians in the second quarter, creating a compelling and differentiated offer across our portfolio of leading brands.

“In only two months the campaign has resulted in circa one hundred new technicians joining our UK business.”

Inchcape said that, with UK trading profit broadly flat, it still expected to deliver a resilient performance in the UK and Europe segment in 2017.

The business has seen the bulk of its growth in emerging markets in H1 2017.

In December Inchcape bought South American vehicle distributor Empresas Indumotora for £234 million. The distribution group handles Japanese brands Subaru and Hino in Chile, Peru, Colombia and Argentina and added further brand representation across more than 30 countries

Stefan Bomhard, Inchcape chief executive, said: “Our revenue, profit and free cash flow performance in the first half of 2017 was well ahead of last year as we continue to put our Ignite strategy into action.

“Reflecting the strength of these results, we now expect to deliver a solid constant currency performance in 2017, modestly ahead of our expectations at the start of the year.

“We achieved growth across our diversified set of value drivers, driven by our continued focus on improving our customers' experiences, delivering the full potential of all revenue streams and by leveraging our global scale.

“Our unique distribution model continues to form the core of our business, generating 73% of Group trading profit in H1 and growing 10.7% at constant currency over the period.

“Our Emerging Markets Distribution operations performed strongly, including accretion from the strategic South American acquisition made at the end of 2016, which is performing well and in-line with our expectations.

“Furthermore, our Asia region saw a return to profit growth in the first half, not only reflecting the stabilisation of New Vehicle demand in Hong Kong but also our actions to better leverage our scale across the region.”

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