A ‘solid’ set of financial results for the first six months of 2009 has been delivered by UK-based international automotive retailer Inchcape.
Despite what the company called ‘extremely challenging trading conditions’, chief executive André Lacroix said the company “delivered a resilient financial performance” for the six months ending June 30.
Sales were down 15% at £2.8 billion (June 2008: £3.3bn) and pre-tax profit before exceptional items was £65.4 million, down 49.8% (June 2008: £130.3m). After exceptional items of £18.4m (June 2008: £nil), profit before tax was £47m (June 2008: £130.3m). Profit for the period was down almost 75% at £26.9m (June 2008: £98m).
The Group generated an operating profit before exceptional items in the first half year of £87.4m, a decrease of 42.2% from the first half of 2008. This resulted in a return on sales before exceptional items of 3.1%, down from 4.6% in 2008.
Mr Lacroix said the group’s performance, although below last year, reflected the company’s focus on executing its five key operational priorities – growing market share, growing aftersales, reducing costs, managing working capital and reducing capital expenditure.
During the six months under review Inchcape reduced its net debt from £408m to £28m and generated cash flow of £217m to strengthen its balance sheet.
Mr Lacroix said: “We are pleased with our first half results due to solid performances in Australia, Singapore and the UK, improved used car margins and good aftersales resilience. However, in light of the global downturn, we remain cautious for the second half.
“We will continue to focus on our five priorities as conditions in our markets remain challenging and we do not expect the global recovery to start until well into 2010. We are confident in our ability to deliver a solid performance for 2009 as a whole and the group is well positioned to benefit from the market recovery.”
In the UK, Inchcape reported an operating profit after exceptionals of £16.6m for the six months under review (June 2008: £32.7m) and a trading profit of £19.6m (June 2008: £32.7m). Sales in the first six months of 2009 were 24.6% down at £1.06bn (June 2008: £1.33bn).
Inchcape said that the Government and motor industry-backed scrappage scheme had seen ‘some positive impact’.
Inchcape predicted that the UK retail market would be stronger in the second half of 2009 as further scrappage scheme sales fed through and demand increased in the fourth quarter of the year ahead of the VAT rise back to 17.5% in 2010.
The company estimated that total new car sales in 2009 would be between 1.75m and 1.85m vehicles, but warned of a lower market in 2010 once the scrappage scheme and VAT cut to 15% had ceased.