30th Jul 2024 11:26
(Alliance News) - Inchcape PLC on Tuesday said it will return additional cash to shareholders via dividends and buybacks following strong growth in the first half.
The London-based company provides distribution services to original equipment manufacturers in the automotive sector.
In the first half that ended June 30, pretax profit from continuing operations rose 9.6% to GBP195 million from GBP178 million the previous year.
Revenue increased 3.6% to GBP4.73 billion from GBP4.56 billion, as cost of sales grew 4.4% to GBP3.91 billion from GBP3.75 billion.
Inchcape raised its interim dividend by 18% to 11.3 pence per share from 9.6p and reduced adjusted net debt by 13% to GBP524 million from GBP601 million.
The board confirmed plans to increase its share buyback programme to GBP150 million from GBP100 million, with buybacks scheduled to begin on August 1 through to the opening quarter of 2025.
Chief Executive Officer Duncan Tait said: "Inchcape delivered a resilient performance in H1 2024, with a strengthening balance sheet, reflecting our scaled and diversified growth portfolio. We delivered strong organic revenue and profit growth, with further high levels of cash generation and returns.
"Our success in winning new Distribution contracts continued during the first half, with four contracts awarded in the period. These contracts, along with our investment in acquisitions, will continue to support the business as we grow in existing markets by building market share, expand into new markets and develop our OEM partner portfolio to drive growth."
As Inchcape shifts focus towards becoming a pure-play automotive distribution business, it is progressing with the sale of its UK Retail business to Group 1 Automotive Inc for a GBP346 million cash consideration due to be completed in the third quarter.
The company said recent acquisitions contributed to 4% of organic revenue growth over the period.
Inchcape bought the Latin America-focused automotive distributor Derco Holdings Ltd in January 2023 in a GBP1.3 billion deal and said it has a "healthy pipeline of bolt-on acquisitions" it hopes to pursue going forward.
Management reiterated its full-year outlook of "moderated growth" and foresees higher levels going forward in the medium to long term driven by market recovery, contract wins, and the development of new technologies.
Inchcape shares were up 2.9% to 865.00 pence each in London on Tuesday morning.
By Elijah Dale, Alliance News reporter
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