Interim Management Statement

RNS Number : 0548V

Inchcape PLC

23 October 2014

 



23 October 2014

Inchcape plc

("Inchcape" or the "Group")

Interim Management Statement

"Double Digit Like-for-Like Revenue Growth in Q3"

This is an Interim Management Statement in accordance with the UK Listing Authority's Disclosure and Transparency Rules. It covers the period from 1 July 2014 to 22 October 2014. Unless otherwise stated, figures quoted in this statement are for the quarter ended 30 September 2014.

Trading update

The Group delivered a strong performance benefiting from its broad international portfolio of 26 markets and from its long standing partnerships with the leading premium and luxury brands in the automotive market.

Revenue in the third quarter was £1.697bn, up 10.6% at constant currency (up by 4.4% at actual currency) compared to the same period last year. Like for like revenue was up 11.6% at constant currency (up by 6.0% at actual currency).

Total revenue for the first nine months to September 2014 was £5.033bn, up 9.6% at constant currency (up 1.9% at actual currency) compared to the same period last year.  Like for like revenue increased 9.4% at constant currency (up by 1.9% at actual currency).

Demand for New cars was strong and well ahead of last year, as we continue to benefit from both the strength of our unique geographic portfolio and the sustained growth in the premium and luxury segments.

Our Used car and Aftersales activities, which represent circa 60% of the Group gross profit, delivered a robust performance, fuelled by the growth of the 1-5 year Car Parc in the majority of our markets.

Our disciplined approach to cost control and cash conversion remains firmly in place.

André Lacroix, Group CEO of Inchcape plc said:

"Our growth momentum continues and we are on track to deliver a strong underlying constant currency performance in 2014. This is testament to the strengths of the Inchcape business model, our differentiated Customer 1^st strategy and our operational excellence enabled by industry leading processes.

The Group has a track record of delivering sustained earnings growth with strong cash generation.  We believe that our focus on premium growth will continue to deliver premium returns for our shareholders, as we will continue to benefit from exciting growth prospects moving forward.

Our partnerships with the world's leading brands in the premium and luxury segments and the strength of our balance sheet, position us both to seize attractive consolidation opportunities and make disciplined capital investments in high margin and high growth markets."

Regional Commentary

We delivered a strong performance in Australia reflecting our robust Subaru market share and the growth in the premium and luxury segments positively impacted the result of our retail operations. We also benefited from favourable transactional exchange rates. 

In North Asia, we recorded strong LFL growth of 20.2%. The growth of the vehicle market accelerated with the implementation of the commercial vehicle scrappage program in Hong Kong.  The sustained development of the 1-5 year Car Parc generated growth in the high margin Service and Parts categories.

In South Asia, our Aftersales operations performed well and we delivered a strong performance as the recovery of the New car market in Singapore accelerated.  Our South Asia business delivered LFL growth of 43.1%.

In our Emerging Markets we delivered a robust performance.  Strong growth in Ethiopia, Chile, Peru and Eastern Europe was partially offset by challenging trading conditions in Russia.

Our European business delivered a solid performance reflecting the successful launch of new products and the recovery of the New car market in Greece.

In the UK, performance was strong with LFL revenue growth of 11.8% as we continue to benefit from sustained growth in the New car market reflecting the strength of our brand portfolio in the premium and luxury segments.

Financial Position

Our financial position remains strong and our working capital and inventory management are in line with expectations.

We expect to end the year with a net cash balance of circa £200m, before taking account of the share buyback announced on 31 July 2014.

We commenced a £100m share buyback program on 4 August 2014 and to date we have purchased 4.1m shares at an average price of 662p for a total consideration of £27.1m.

2014 Outlook

We expect the Group to deliver a strong underlying constant currency performance in 2014.  Notwithstanding the competitive pressure on vehicle margin in some of our markets, we are well positioned to take advantage of the attractive growth prospects in the premium and luxury segments and continue to outperform the industry.

These exciting growth prospects reflect the unique strengths of Inchcape's geographic portfolio as our markets benefit from strong economic fundamentals and industry growth drivers distinct to our regions. These include the commercial vehicle scrappage scheme in Hong Kong, the important regulation-led recovery of the Singaporean market and the growth in the 1-5 year global Car Parc generating high margin aftersales demand.

The Group remains firmly committed to its Top 5 priorities of growing market share, growing Aftersales, improving margin, controlling working capital and being selective about capital investments.

Ends.

Group Communications, Inchcape plc	[phone]
Investor Relations, Inchcape plc	[phone]
FTI Consulting (Jonathon Brill/Edward Westropp)	[phone]

Notes to Editors

1.   References in the regional commentary are at constant currency. 

2.   About Inchcape: Inchcape is a leading global premium automotive group, operating in 26 markets with a portfolio of the world's leading car brands in the fast-growing luxury and premium segments. Inchcape has diversified multi-channel revenue streams including sale of new and used vehicles, parts, service, finance and insurance. The Company has been listed on the London Stock Exchange since 1958, is headquartered in London and employs around 14,400 people. www.inchcape.com

3.   Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are 'forward-looking statements' within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.

4.   Our Market Estimates for 2014 and 2015 as at 23 October 2014 will be available for download at 9am from http://www.inchcape.com/investors/investor_library

5.   Conference call for Analysts and Investors - For details please contact Laura Vaughan at FTI Consulting on [phone].

6.   The next update on trading is expected to be the Group's final results announcement for the year ending 31 December 2014 on 10 March 2015.

 

END

 

 

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