30th Jul 2015 13:36
LONDON (Alliance News) - Vehicle distributor and retailer Inchcape PLC on Thursday said its pretax profit fell in the first half of 2015, thanks to adverse currency movements and higher costs, but shares in the group were trading higher as it said its underlying like-for-like revenue growth was robust in the period and as it launched a new GBP100 million share buyback.
FTSE 250-listed Inchcape said its pretax profit in the first half fell to GBP153 million from GBP162.1 million a year earlier, despite revenue edging up to GBP3.4 billion from GBP3.3 billion on a reported basis. Like-for-like revenue at constant currencies, however, rose by 7.8% in the half and the group's underlying operating profit was up by 5.6%, compared to a 5.2% decline on a reported basis.
Inchcape said it will pay an interim dividend of 6.8 pence per share, up from 6.3p per share a year earlier, and said it will launch a GBP100 million share buyback.
"The group has continued to grow both revenue and underlying profit in the first half of 2015, driven by our strong portfolio of high quality Distribution and Retail businesses in some of the most attractive segments of a global growth industry," said Chief Executive Stefan Bomhard.
"While we have experienced challenges in some of our markets in the first half of the year, the proven resilience of our unique business model with its broad global spread, together with our operational rigour, continues to drive overall growth and attractive returns for our stakeholders. We continue to expect the group to deliver a robust underlying constant currency performance in 2015," Bomhard added.
Inchcape shares were trading up 7.3% to 807.50 pence on Thursday, one of the best performers in the FTSE 250 in afternoon trade.
The group's strongest performances in the half came in North Asia and Australasia, with the former boosted by substantial market share gains and the latter coming in ahead of expectations despite supply shortages. The group also performed well in Russia, where it managed to navigate the difficult economic conditions prevalent in the country amid the sanction imposed on it over its actions in Ukraine.
In the UK, from which Inchcape generates around a third of its revenue, the group saw a continuation of the strong market trends driven by the underlying replacement cycle, a sustained high level of consumer confidence and attractive price offers across all segments. Brand partners to Inchcape have continued to grow ahead of the market and like-for-like revenue in the division was up around 10%, the company said.
Inchcape's trading margin in the UK business deteriorated, however, down to 2.8% from 3.0% due to the higher contribution of vehicles sales to revenue, lower used-vehicle margins for some brand partners, and costs related to an investment in IT systems.
For Europe, which includes its operations in Belgium, Luxembourg, Greece and Finland, revenue in the first half dropped 19%, a fall exacerbated by the weak euro but still down by 9.5% in constant currencies. The group said it saw something of a recovery in the Greek new vehicle market in the half, but the outlook for the market is uncertain given the ongoing debt bailout negotiations in which the country is engaged.
Inchcape said it is well-prepared for the difficult economic climate in Greece and expects to be able to successful navigate its choppy economic waters.
By Sam Unsted; [email protected]; @SamUAtAlliance
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