Diversification is the name of the game if you’re a car retailer right now. Even better news for investors in Inchcape (INCH) is that the group actually derives three-quarters of its profit from its distribution operations rather than its retail outlets. That’s been a conscious part of the group’s ‘Ignite’ strategy, which chief executive Stefan Bomhard says is “really starting to drive growth”.
Even for sceptics who argue that currency boosted reported figures (group sales rose 18.7 per cent at actual rates), the higher cost of buying Japanese cars and selling them in Australian dollars offset this. At constant currencies, revenue still rose close to 10 per cent, which suggests that the underlying picture at Inchcape is improving, too.
According to Mr Bomhard, this is down to the group’s focus on emerging markets, particularly those spanning Latin America. During the six-month period, trading profit across this segment rose 76.5 per cent at constant rates to £41.2m, compared with a far more modest 1.8 per cent improvement to £54.6m across the UK and Europe.
Analysts at Zeus Capital expect pre-tax profit of £378m for the year ending December 2017, giving EPS of 63p, compared with £349m and 59p in 2016.
| INCHCAPE (INCH) | ||||
| ORD PRICE: | 813p | MARKET VALUE: | £3.37bn | |
| TOUCH: | 813-814p | 12-MONTH HIGH: | 861p | LOW: 587p |
| DIVIDEND YIELD: | 3% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 319p* | NET DEBT: | neg | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 3.76 | 165 | 27.6 | 7.0 |
| 2017 | 4.46 | 192 | 33.1 | 7.9 |
| % change | +19 | +16 | +20 | +13 |
| Ex-div: | 03 Aug | |||
| Payment: | 06 Sep | |||
| *Includes intangible assets of £619m, or 149p a share | ||||
