- Inchcape increased its revenue by 4% (in constant currency) compared to 2023, reaching £9.3 billion. Its adjusted profitability before tax also grew by 5% (in constant currency), amounting to £444 million.
- This resilient financial performance was driven by strong cost discipline across the Group.
- The standout results from the Americas in the second half of the year and the achievement of a record-breaking 14 new manufacturer contracts in the region also contributed significantly.
- Reflecting these strong results, Inchcape announced a medium-term growth target of over 10% in earnings per share and a new £250 million share buyback programme.
Inchcape plc, the world’s largest independent automotive distributor, announced its results for the fiscal year ended 31 December 2024.
The Group’s revenue reached £9.3 billion, representing a 4% increase in constant currency, comprising 2% organic growth and a 2% contribution from acquisitions. Exchange rate movements created some headwinds, reducing revenue by 5%, resulting in a 1% decline in reported terms.
The Group achieved an adjusted operating profit of £584 million, a 2% increase in constant currency. Adjusted operating margins reached 6.3%, supported by its cost discipline.
Overheads remained stable, with an adjusted net operating expense-to-revenue ratio of 11% during the year (2023: 11.1%). Adjusted net finance costs decreased to £142 million (2023: £154 million), largely driven by the positive impact in the Americas, which capitalised on a significant reduction in average net debt through inventory optimisation and payment terms.
Adjusted profitability before tax also grew by 5% (in constant currency), amounting to £444 million, offset by a 10% impact from exchange rate movements.
One-off costs related to acquisitions and integrations decreased to £42 million (2023: £50 million) and were primarily associated with the integration of Derco. However, the sale of the non-original parts business in Chile (Autoplanet) balanced the scales, contributing one-off gains of £6 million.
Strong inventory management and continued alignment of terms with suppliers of acquired businesses demonstrated Inchcape’s business model’s ability to generate cash, with free cash flow generation of £462 million (2023: £492 million). Inventory levels fell to £1.935 billion (2023: £2.718 billion), primarily due to efficiency improvements in inventory management across the Group.
As of 31 December 2024, the Group’s adjusted net debt stood at £190 million, a significant reduction compared to fiscal year 2023, when net debt was £601 million (excluding lease liabilities).
Thanks to its prioritised focus on the automotive distribution business, Inchcape achieved a return on capital employed of 27% during the year, in line with fiscal year 2023 based on continuing operations and higher than in previous years.
In the announcement, Duncan Tait, Global CEO of Inchcape, highlighted: “In 2024, Inchcape made significant progress, growing revenue and earnings in line with our expectations at the start of the year. This performance is underpinned by our diversified and scaled global leadership position, our long-standing relationships with automotive manufacturers, our high-performance culture, and our unique technological capabilities. 2024 was a record year for securing distribution contracts. We implemented the evolution of our strategy, Accelerate+, and divested non-core assets. Looking ahead, we expect to continue growing the business and, by the end of fiscal year 2030, we anticipate generating £2.5 billion in free cash flow, delivering returns to shareholders through share buybacks and value-accretive acquisitions. This will result in a target of over 10% compound annual growth in earnings per share through the cycle, supported by a return on capital employed of between 25% and 30%”.
Inchcape Americas improves its performance in the second half, contributing to strong global results.
The Americas region comprises 14 countries, collectively representing 35% of the company’s revenue and 36% of its operating profit. Due to general declines in some Latin American markets, in 2024, revenue in the region decreased by 4% in constant currency. However, it managed to increase its market share and achieve organic growth in the second half, demonstrating its solid and resilient performance across the region.
Notably, the region secured 14 new brand distribution contracts throughout 2024, including several Changan brands in various countries and Great Wall Motors in Colombia.
Additionally, aiming to achieve the ideal brand portfolio for each market and maximise the existing infrastructure, agreements were reached with four manufacturers in 2024 to terminate distribution contracts that were immaterial in business terms. In the words of Romeo Lacerda, CEO of Inchcape Americas: “We expect this dynamic to continue in the coming years, ensuring that we are maximising value for both Inchcape and our manufacturing partners”.
Adjusted operating margins stood at 6.3%, due to a deleveraging effect from volume reductions in the markets during the first half. However, operating margins improved in the second half, reaching 6.6%, thanks to greater operational efficiency and the capture of synergies from acquisitions across the region.
Outlook for 2025
For fiscal year 2025, Inchcape expects a recovery in the Latin American market and is confident in its resilience to deliver the expected margins.
Globally, Inchcape projects another year of growth in revenue and earnings, with higher growth in earnings per share, consistent with our medium-term objectives, and a £250 million share buyback programme, reflecting its cash-generative business model, strong balance sheet, and confidence in the Group’s long-term prospects.