Global car retailer Inchcape (INCH) has enjoyed a healthy start to the second half of the year, reporting a 7.8 per cent rise in third quarter revenue to £1.62bn in constant currency. Like-for-like sales, a good measure for the underlying growth of the business, grew 4.2 per cent as demand for new cars continued to rise, particularly the luxury varieties in which Inchcape specialises.
In the UK, like-for-like sales grew 13.4 per cent, underlyinh sales in North Asia were up 7.1 per cent and the emerging markets and Russia segment reported 6.7 per cent growth, although Russia suffered declines because of weaker consumption which put pressure on new car margins. In Australia, management said growth was "solid", but gave no underlying sales figures. The European business faced a "challenging" environment and the South Asia segment was dampened by trading in Singapore, where the new car market is still in decline. No comparable sales figures were reported for South Asia, but analysts believe they are likely to have been negative.
Inchcape's strength is its vertically integrated model and geographic diversification, but this global exposure has also become a weakness, as certain markets, including Russia, South Asia and Europe, are holding back growth. Together, Europe and South Asia accounted for 16 per cent of group revenue and 18 per cent of operating profit in the last financial year. The valuation gap with its peers has narrowed to roughly 10 per cent, according to Numis Securities.
