A familiar refrain is repeated in dealer forecourts across the land. The residual effects of the VW diesel scandal have reduced new car volumes, or more accurately resulted in an oversupply of diesel vehicles in the market – stranded assets, if you will. The issue has exacerbated the normal cyclical downturn, while the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) has resulted in supply shortfalls due to backlogs in the testing schedule. To make matters worse, we’re also probably at the wrong end of the credit cycle.
Against this backdrop, Inchcape (INCH) produced a reasonably decent showing, at least if you disregard £198m in goodwill and asset impairments. Ex-exceptional net earnings came in at £266m, an 8 per cent decline on the previous year – not the desired outcome, but not one likely to spook analysts.
Predictably, retail trading bore the brunt of wider industry problems, with constant currency trading profit down 58.7 per cent. By contrast, Inchcape’s distribution arm delivered 6.5 per cent on the same basis, aided by the addition of new central American businesses.
Bloomberg expects adjusted net income for 2019 of £254m, leading to EPS of 62.3p, rising to £261m and 65.2p in the following year.
| INCHCAPE (INCH) | ||||
| ORD PRICE: | 558.5p | MARKET VALUE: | £2.32bn | |
| TOUCH: | 558-559p | 12-MONTH HIGH: | 826p | LOW: 482p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 48 | |
| NET ASSET VALUE: | 335p* | NET DEBT: | 3% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 6.70 | 256 | 39.7 | 20.1 |
| 2015 | 6.84 | 263 | 39.8 | 20.9 |
| 2016 | 7.84 | 268 | 43.2 | 23.8 |
| 2017 (restated) | 8.95 | 369 | 64.3 | 26.8 |
| 2018 | 9.28 | 132 | 11.6 | 26.8 |
| % change | +4 | -64 | -82 | - |
| Ex-div: | 16 May | |||
| Payment: | 21 Jun | |||
| * Includes intangible assets of £606m, or 146p a share. | ||||
