Inchcape is “confident” to deliver on its medium-term growth plans after posting 53% growth in adjusted pre-tax earnings in the first half of 2022.
A commercial update published by the AM100 car retail and distribution PLC showed revenue rose 8% to £3.89bn, with adjusted pre-tax profit reaching £184m as of June 31.
They attributed “an excellent first half” in both distribution and retail to strong margins resulting from a combination of strong consumer demand and favorable pricing amid tight supply of new vehicles.
During the period, the business expanded its bravoauto used car supermarket division in the UK to add to the growth provided by the addition of four new distribution businesses over the past 12 months, including Geely (Chile), utility vehicles in Guam and Micronesia, Ditec (Chile) and Simpson Motors (Caribbean).
Commenting on the result, Managing Director Duncan Tait said: “Inchcape had a great first half. Continued strong consumer demand and fantastic execution from our teams resulted in growth in revenue, profit and cash. .
“We also made excellent progress with the two strategic growth priorities of our Accelerate strategy.
“First, we continued to expand our global leadership in automotive distribution, adding new OEMs through acquisitions and contract wins, and investing more in digital and data analytics – a key differentiator driving the growth.
“Second, we are making progress in capturing greater vehicle lifetime value with the rollout of bravoauto, and will launch the platform in multiple markets in the second half of the year.”
Today, Inchcape announced the acquisition of Derco, Latin America’s largest independent automotive distributor, in what it described as “an important step in executing on this strategy”.
Inchcape’s car retail divisions in the UK and Europe Inchcape saw a 6% decline in revenue, from £1.23 billion to £1.15 billion, in the first half of 2022, but operating profit increased by 83% to £30.3 million.
In today’s trading update, the group said demand for vehicles (both new and used) remained strong, which continued to support vehicle margins amid tight supply.
However, revenue decreased by 1% on an organic basis (Q1: +18%) in Q2.
The trading statement said: “Although the comparator in the second quarter was more difficult, due to the post-rebound rebound, this was partly offset by an improvement in new vehicle supply and growth in our bravoauto business. .”
The most recent additions to the bravoauto network were made in Stoke and Guilford last month. Hopes to have 17 locations open by the end of 2022.
Former UK CEO James Brealey told AM that the group’s restructuring of its franchise car retail operations was largely complete in an interview last year.
However, it acquired Bentley Motor Group’s Toyota and Citroën sites in Warrington and also agreed to sell its Oxford Toyota franchise to Steven Eagell Group earlier this month.
Giving its outlook for the full year, Inchcape said it expects to deliver FY22 adjusted PBT from continuing operations between £350m and £370m.
He added: “The strength of our business model and financial position means that Inchcape is well positioned to continue to grow earnings and generate cash, and we are confident in the medium-term outlook presented at Capital Markets. Day in November.”