Buy defensive, global Inchcape

First and foremost, the global spread of Inchcape's business model has insulated it from the sterling-based currency pressures suffered by other UK-centric motor retailers. In fact, recent full-year results showed just how the current foreign-exchange environment is working to the group's advantage. Based on reported currencies, revenues rose 14.7 per cent last year to £7.8bn. Even at constant exchange rates this still represented an underlying improvement of 7.6 per cent. Despite a squeeze in margins from 4.7 per cent to 4.6 per cent as a result of a change in the mix of sales, underlying pre-tax profit of £349m came in 5 per cent ahead of consensus forecasts. That represented growth of 12 per cent at reported currencies. Finally, the group also finished the year with net cash balances worth £27m compared with broker Liberum's projection of £11m.

Operationally, there's a lot to like too. The group's "ignite" strategy is increasing the amount of profits from used vehicles and aftersales, which is becoming increasingly important in light of a weaker new vehicle market, particularly in Hong Kong. On a reported currency basis, gross profits from vehicle sales managed to grow 7.5 per cent last year, while aftersales increased by 12 per cent. There are, however, nuances to be aware of. As well as Hong Kong muting the progress of the Asia business (35 per cent of trading profit), the strength of the yen has held back the Australasia division (26 per cent of profit). Results were also affected by disposals across the Australian business of 'non-core' sites, including Peugeot, Harley Davidson and Volvo, as well as a decline in Russian aftersales as a result of the prolonged weakness in the new car market there.

In contrast to the current angst about the outlook for the UK, trading here was actually particularly good last year. Registrations grew by 2.3 per cent, used-car volumes rose 15 per cent and margins grew too - the UK's used-car and aftersales markets are expected to remain strong. This helped contribute to a trading profit improvement of 5.5 per cent at constant currencies across the UK & Europe division as a whole.

Management expects to continue enjoying a currency tailwind into 2017, and growth at constant exchange rates should also fare well. The group is also looking forward to a boost from a recent acquisition in South America, while a share buyback programme will also continue into the current financial year. Finally, a £35m internal investment programme should bring down the level of fixed costs in the business over time, although the majority of that cash outlay is expected this year.