Inchcape profits plunge as weaker conditions in the UK, Australia retail markets hurt performance

Writer, Stock Market Wire
Thursday, February 28, 2019 - 10:01

Inchcape's profits plunged Thursday as asset write downs and weaker trading conditions in the UK and Australia retail markets hurt performance.

For the 12 months to 31 December, pre-tax profits fell 64.2% to £132.1m and revenue increased 3.6% to £9.28bn.

Retail trading profit fell 59.2% to £26.5m and distribution trading profit rose 2.2% to £374.9m.

'Margins in our retail channel came under further pressure due to the continued UK market supply and demand imbalance, the incremental impact of the new Worldwide Harmonised Light Vehicle Testing Procedure (WLTP) regulation, and a slowing Australia market, the company said.

Aftersales gross profit grew 7% in constant currency, excluding the Central America acquisition, with particularly 'encouraging performances in key regions such as South America, whilst Used cars performed very well over the year,' the company added.

Looking to the nearer term, excluding an expected AUDJPY transactional currency headwind, the company said it expects its performance in 2019 to remain resilient, in-line with continued market trends already seen towards the latter part of 2018.

The company proposed a final ordinary dividend of 17.9p, taking the total dividend for the year to 26.8p, unchanged from 2017.

The company also announced Thursday two new distribution contracts with BMW. It would now operate in Lithuania, becoming BMW's distributor across the Baltics having been awarded BMW in Estonia in 2017, and Kenya following on from its market entry in 2018 with JLR.

'Whilst there remain uncertainties in many of our markets, we have much in our control and we look forward to continued momentum in our business as we continue to execute on our Ignite strategy. Our capital allocation priorities remain unchanged and we continue to regularly review buybacks, with a prudent view given current macro uncertainties', the company said.

At 10:01am: (LON:INCH) Inchcape PLC share price was -51.5p at 542p

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