Despite a solid set of first-half numbers, it looks very much like car distributor and retailer Inchcape (INCH) will face challenges in the latter part of the financial year. First and foremost, the company finds itself operating in a post-referendum economy, which could hold back demand in the UK, while a sluggish consumer backdrop in Hong Kong is expected to continue for now.
But chief executive Stefan Bomhard remains optimistic. He says it is "too early to tell" what the long-term consequences of the Brexit vote might be for the UK's motor industry, while Inchcape's global footprint should protect it from any domestic downturn in the near term. On that point, it's worth noting that just a fifth of group trading profits are generated in its domestic market. The group operates across 27 different territories and reported particularly strong performances across emerging markets and Australia in the first half. It also won a major distribution contract in Thailand with Jaguar Land Rover.
For now, the best piece of news for investors is a £100m extension to its share buyback programme. Mr Bomhard says the business remains "highly cash generative", and he considers this was the best use for surplus funds at this time.
Deutsche Bank has trimmed EPS forecasts for the year ending December 2016. Analysts there now expect EPS of 55.9p for the year to December 2016 on pre-tax profits of £335m, up from 51.6p and £312m in 2015.
| INCHCAPE (INCH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 697.5p | MARKET VALUE: | £2.99bn | |
| TOUCH: | 697-697.5p | 12-MONTH HIGH: | 840p | LOW: 574p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 317p* | NET CASH: | £136m | |
| Half-year to 30 June | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 3.38 | 153 | 25.4 | 6.8 |
| 2016 | 3.76 | 165 | 27.6 | 7.0 |
| % change | +11 | +8 | +9 | +3 |
Ex-div: 4 Aug Payment: 7 Sep *Includes intangible assets of £434m, or 101p a share | ||||
