Inchcape in profit rise as its sales rally

GLOBAL car dealership Inchcape saw its profit jump by 38 per cent last year as emerging markets performed strongly.

Profit before tax and one-off items was £214m, also helped by cost savings across the business.

However, Inchcape warned that it expected pressure on gross profit margins this year due to the appreciation of the yen and to rising input costs for manufacturers, but predicted a “solid performance” overall.

“In 2011, we continue to expect to see an uneven global recovery with market growth in Hong Kong, Australia, Russia, Finland, the Baltics, Africa and South America,” said the British-based group, which sells and distributes cars for manufacturers like BMW, Toyota and Mercedes-Benz in 26 markets.

“However, we anticipate market declines in Singapore, Greece, Belgium and the UK, which together represent circa 50 per cent of group sales,” it added.

Its fleet business lifted trading profits by 66.7 per cent to £6.5m, benefiting from end of contract extension deals.

The company’s aftersales business in the UK performed ahead of last year due to Inchcape Advantage – a group-wide improvement programme for customer service.

Inchcape, which has been listed on the London Stock Exchange since 1958, is headquartered in London and employs around 14,300 people.

The company’s shares rose by 1.8 per cent to close at 398.42p after the announcement.

Inchcape also said it was recommending that dividend payments be resumed.

Analysts at Investec raised their pretax profit forecast for 2011 for Inchcape from £215m to £223m.