A reassuring outlook statement and a new £100 million share buyback point to confidence in a resilient performance to come, helping the shares to continue their recent rebound, up a further 5p to 724.5p.
Results for the six months to June show like-for-like sales up 9.1% at constant currency and 7.8% growth in taxable profits to a better-than-expected £165 million. Sales are up 11.2% to £3.8 billion and Inchcape also declares a 2.9% increase in the dividend to 7p.
Appointed in April 2015, CEO Stefan Bomhard (pictured below) flags positive revenue and profit trends in the majority of the London-based company's markets, star performances from the South Asia (Singapore) and Emerging Markets businesses countering tough conditions in North Asia, notably in Hong Kong and Macau.
As Bomhard explains: 'Our performance reflects our attractive positioning in the automotive industry. We are predominantly a distributor, with long-standing relationships with the world's leading OEMs and high barriers to entry. We operate across a diversified set of value drivers in a global portfolio of markets, with the majority of our profit coming from Asia Pacific and Emerging Markets.'
As Shares outlined here in March, long-established partnerships with a select band of high-end car brands, among them BMW, Aston Martin, Porsche and Mercedes-Benz, as well as entrenched distribution in developing markets, have combined to carve out a wide economic moat for Inchcape. Earnings are diversified across five continents and revenue streams are similarly varied (new and used car sales, higher margin aftersales, spare parts, finance and insurance products).
Strong cash generation has long been a hallmark of Inchcape, which ended the half with £135.6 million net cash in the coffers. Having returned £300 million through its buyback over the past three years, Bomhard announces a £100 million extension to the programme, this extra surplus cash to be returned to shareholders over the coming 12 months.
'We expect to deliver a resilient constant currency performance in 2016,' insists Bomhard, who also reports a £5.1 million gain from translating overseas profits into sterling for the half. 'This reflects the strength of our South Asia and Emerging Market performances as well as the difficult trading environment in our North Asia region, the adverse exchange rate between the Japanese yen and the Australian dollar and uncertain UK demand outlook. With over three quarters of profits denominated in currencies other than sterling, our reported actual currency performance will benefit if current exchange rates prevail.'