International automotive group Inchcape, which is one of the UK’s largest dealer groups, says that its financial performance for 2009/10 is expected to be significantly ahead of previous expectations leaving the firm ‘broadly debt-free’ by the year-end.
However, the company has warned that it expects conditions to remain challenging in most of its markets until well into the second half of 2010 as consumer confidence continues to be weak across the world and unemployment is still rising in many of its key markets.
But, said Inchcape in a trading update: “We are confident that with our continued focus on costs and working capital, the group has the financial strength and flexibility to trade effectively and continue to gain share in these challenging conditions.”
Group CEO André Lacroix said: “Whilst we continue to experience an extremely challenging market environment, we have benefited in the third quarter from stronger than expected trading in several core markets.
“This demonstrates the benefits of our broad geographic portfolio, the strengths of our business model and the impact of our self-help measures implemented throughout the group.
“With increased share across our key markets, scale positions in established and emerging markets and industry consolidation opportunities in the medium term, we are confident that the group is well positioned to continue to outperform our competitors and to benefit from market recovery.”
Inchcape reported that revenue for the third quarter was 13.4 per cent below last year, but was 2.2 per cent ahead of the second quarter. The better than expected trading update, prompted Investiec, the group’s broker, to raise its full-year pre-tax profit forecast from £120 million to £140m.
In the UK, Inchcape said it had benefited from the impact of the scrappage incentive scheme and used car margins being maintained at the exceptional level seen in the first half.
However, the company warned that the underlying demand for new vehicles remained weak as third quarter registrations excluding scrappage were down 15.1 per cent versus 2008 and 28.6 per cent versus 2007.