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Motor retailer Inchcape grows despite soft Europe, Russia

Despite tricky market conditions in Europe and Russia, Inchcape met its profit target last year
March 15, 2016

A stronger second half allowed motor retailer Inchcape (INCH) to meet full-year profit forecasts last year. Overall like-for-like sales growth of 9 per cent along with robust margins meant underlying pre-tax profit came in at £312m. That was an 11 per cent improvement at constant currencies on the prior year, and bang in line with market expectations.

IC TIP: Hold at 726p

On the revenue side, Inchcape's broad geographical spread meant the picture was varied. Sales grew strongly across Australia, the UK and north and south Asia. But revenues at the European segment fell 19.7 per cent due to a decline in market share in Belgium and the closure of operations in Finland. Russia also struggled due to the poor macroeconomic outlook; sales there dropped 13.5 per cent, which accounted for the emerging markets division's 4.8 per cent sales dip.

By the end of the period Inchcape had completed £41m of its £100m share buyback programme - the third such programme in three years. The remainder should be complete by the half-year stage this year.

Broker Numis expects pre-tax profit of £328m in 2016, giving EPS of 54.8p, compared with £311m and 51.4p in 2015.

INCHCAPE (INCH)
ORD PRICE:726pMARKET VALUE:£3.14bn
TOUCH:726-726.5p12-MONTH HIGH:898pLOW: 658p
DIVIDEND YIELD:2.9%PE RATIO:18
NET ASSET VALUE:282p*NET CASH:£59m

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20115.8320331.011.0
20126.0924839.414.5
20136.5226641.817.4
20146.7025639.720.1
20156.8426339.820.9
% change+2+3-+4

Ex-div: 26 May

Payment: 24 Jun

*Includes intangible assets of £418m, or 97p a share