2017 Interim results
Strong earnings driven by ignite
Interim results 27 July 2017
First half highlights
- Track record of growth continues, operating profit +23% at actual currency and EPS +24%
- Strong free cash flow generation, supporting our ability to drive shareholder returns, dividend per share +13%
- Strong underlying performance in Emerging Markets continues, with return to profit growth in Asia
- Ignite strategy driving good Group Aftersales growth and Used Car strength in UK
- Integration of the South American acquisition progressing well, in-line with our expectations
- Further deal momentum with Distribution additions for BMW in Estonia and PSA (Peugeot & Citroen) in Australia
- Given recent M&A success and pipeline no further buyback at this time. Board will continue to monitor balance sheet
| Actual rates | H1 2017 | H1 2016 | Actual Currency YoY |
Constant Currency YoY |
| Revenue | £4.5bn | £3.8bn | +18.7% | +9.5% |
| Pre-exceptional1 operating profit |
£208.0m | £169.5m | +22.7% | +10.8% |
| Reported profit before tax | £191.7m | £165.0m | +16.2% | +5.0% |
| Pre-exceptional1 profit before tax | £196.8m | £165.0m | +19.3% | +7.8% |
| Reported basic EPS | 33.1p | 27.6p | +19.9% | |
| Basic adjusted EPS | 34.1p | 27.6p | +23.6% | |
| Dividend per share | 7.9p | 7.0p | +12.9% |
| Vehicle gross profit | £386.3m | £339.5m | +13.8% | +3.9% |
| Aftersales gross profit | £228.7m | £185.8m | +23.1% | +12.9% |
| Distribution trading profit | £161.1m | £130.3m | +23.6% | +10.7% |
| Retail trading profit | £60.3m | £53.4m | +12.9% | +8.1% |
1. H1 2017 reported profit includes an exceptional charge of £5.1m in relation to the fixed cost review announced in 2016 and transactional costs for the South American acquisition in December 2016.
Stefan Bomhard, group CEO of Inchcape plc, commented
“Our revenue, profit and free cash flow performance in the first half of 2017 was well ahead of last year as we continue to put our Ignite strategy into action. Reflecting the strength of these results, we now expect to deliver a solid constant currency performance in 2017, modestly ahead of our expectations at the start of the year.
We achieved growth across our diversified set of value drivers, driven by our continued focus on improving our customers’ experiences, delivering the full potential of all revenue streams and by leveraging our global scale. I am pleased with the growth in our high-margin Aftersales operations, as we benefit from better expertise sharing within the Group. We have become ever more innovative in our approach to best serve the evolving needs of our customers, especially in digital. I can also report that we continue to identify incremental annual procurement cost savings.
Our unique Distribution model continues to form the core of our business, generating 73% of Group trading profit in H1 and growing 10.7% at constant currency over the period.
Our Emerging Markets Distribution operations performed strongly, including accretion from the strategic South American acquisition made at the end of 2016, which is performing well and in line with our expectations. Furthermore, our Asia region saw a return to profit growth in the first half, not only reflecting the stabilisation of New Vehicle demand in Hong Kong but also our actions to better leverage our scale across the region.
We have a disciplined capital allocation framework and a strongly cash generative business model which enables us to invest in organic and inorganic opportunities to drive growth.”