Inchcape’s revenues have dropped 32% in the first four months of 2020 as the international auto retailer and distributor battled coronavirus impact.
Revenues were down to £2.1 billion. Sales were down 41% at Its retail operations and 23% at its distribution businesses.
In Europe, it said, prior to COVID-19 enforce lockdowns the revenue performance “had been solid”.
“As of today, we are open in 25 markets (including Australia, Hong Kong and Ethiopia), and remain closed in eight markets (including UK, Singapore and Chile).
“Since our update on April 7, while we have had no additional closures, trading has recommenced in several markets (including Belgium, Greece and Colombia).
“Inchcape has taken prompt action to optimise cash flow, reduce costs and strengthen further our liquidity position in light of the current market environment.”
Measures include suspending its share buyback programme, cancelling its £70m final dividend payment in April, participation in the UK’s COVID Corporate Financing Facility, reducing discretionary costs and a 20% cut in Q2 salary for its board and senior managers.
In April, overall group revenues were down 76% like-for-like, mainly due to the disruption caused by Covid-19.
“The impact of closures on profitability will be pronounced, and result in a drop-through to operating profit of approximately 10% of lost revenues,” Inchcape said.
“Inchcape has a strong balance sheet, having ended 2019 in a net cash position, aided by strategic retail disposals. The group has been confirmed as an eligible issuer under the UK Government's Covid Corporate Financing Facility (CCFF) and as of May 21 we have drawn down £100m."
In the last two years Inchcape has sold off its leasing division, more than a dozen UK dealerships and exited the automotive market in China.
“In addition to the flexibility provided by the CCFF, as of today, the group has available cash of £245m and £420m of headroom in our RCF. Our net debt currently stands at £210m," Inchcape's trading statement continued.
The board said it remains “comfortable that we have sufficient financial resources” to navigate an extended period of disruption.
It added that it is still too early to provide a forward-looking view of the company's performance in 2020.