27 February 2018

International trading group, Inchcape, has reported a strong growth in both revenue and operating profit for the year ended December 31, 2017, despite pressure on its retail business. The group has benefited from its strategic focus on wholesale distribution and its global diversification.

Stefan Bomhard, Group CEO, told shareholders: “In 2017 we generated 79% of profits through distribution and increased our exposure to the attractive emerging markets to 21%, double the 2014 level. This has enabled us to deliver a solid trading profit performance over the year, despite margin pressures in retail markets.”

Group global revenues for the year were up by 9.4% (on a constant currency basis) to £8.9bn and operating profits (constant currency) up 36.4% to £394.9m. However, trading profits in the group’s global retail division were down by 14.2% to £93.2m.

The group no longer breaks out the UK market separately but Bomhard noted: “At the start of 2017, we set out our expectations for a challenging year and predicted declining sales volumes in the UK new car market. This proved to be the case, with an overall decline of 6% from the peak year of 2016.

“In this market context, margins have been under pressure and profit has consequently declined. As expected, our UK and Europe region saw profit this year reduced by 17% at constant currency, with a marked downturn in the second half of the year.”

In its half-year results, the group had said that trading profit in the UK was “broadly flat” and growth across the UK and Europe was “solid”.

Full year retail revenue across UK and Europe was actually marginally up, at £3.56bn, but profit was down to £58.8m and the retail margin dropped by 3 percentage points to 1.8%.

Bomhard noted that the falling UK new car market has led to a “supply and demand imbalance” and the group’s business had been divided “across brands which traded broadly in-line with the prior year and those which saw greater challenges across gross profit for both new and nearly new vehicles.”

The group has recently appointed a new UK retail managing director who has made a number of senior management changes.

Tags: 2017 results, Inchcape, Stefan Bomhard