Inchcape's Profit Dips Amid UK Car Sales and Leasing Challenges

Strategic Insights -

Inchcape, the world's biggest independent automotive distributor, has seen its headline profits decline by more than a quarter in the six months to June 30, dropping from £40.9m to £30m. Despite this, Chief Executive Peter Johnson remains optimistic about the company's future prospects, citing a revival in south-east Asian markets and the group's targeting of e-business opportunities as key growth areas.

Key Takeaways:

  • The disposal of non-motors businesses accounted for £5.6m of the decline in headline profits.
  • Operating profits in the three main trading areas rose 3.2% to £54.1m, driven by a recovery in Hong Kong, Singapore, and other markets.
  • Continuing operating profit fell slightly to £40.1m (down from £43.5m), partly due to further investment in Autobytel, the US-headquartered internet vehicle trading business.
  • Inchcape has spent $10m (£6.6m) on a 7.3% equity stake in Autobytel's European subsidiary.
  • The company's two associate companies, Toyota (GB) and MCL, reported a combined operating profit of only £1m, a 76% fall compared to the previous year.
  • The sale of Toyota (GB) to Toyota Motor of Japan provided a strong balance sheet, with reduced gearing of 10.7%.
  • Peter Johnson remains optimistic about Autobytel's growth prospects, despite the hype surrounding automotive e-business.

Statistics:

  • Headline profits declined by 25% from £40.9m to £30m in the six months to June 30.
  • Operating profits in the three main trading areas rose 3.2% to £54.1m.
  • Continuing operating profit fell slightly to £40.1m from £43.5m.
  • Inchcape's disposal of non-motors businesses accounted for £5.6m of the decline in headline profits.
  • The company spent $10m (£6.6m) on a 7.3% equity stake in Autobytel's European subsidiary.
  • Inchcape's two associate companies, Toyota (GB) and MCL, reported a combined operating profit of £1m, a 76% fall.

Sources:

  • "Inchcape denies profits warning" by Garry Griffith, Financial Times, June 30
  • "Inchcape sells Toyota unit to Toyota Motor" by Garry Griffith, Financial Times, June 15
  • "Inchcape £30m profit prompts caution" by Ben Smith, Sunday Times, June 30