Inchcape still cautious, but profit pleases

City A.M. Reporter
INCHCAPE, the international car dealer, posted a smaller-than-expected fall in 2009 profit, helped by cost cutting and market share gains, but said it did not see a recovery in its markets until late this year.

The British firm, which sells and distributes cars for manufacturers including BMW, Mercedes-Benz, Honda and Toyota in 26 countries, said yesterday profit before tax and one-off items fell 19 per cent to £155.1m ($232.5m) last year on an 11 per cent fall in sales to £5.6bn.

That was ahead of analysts’ profit forecasts of between £141 and 151m, and helped by about £70m of cost savings and the resilience of the London-listed group’s used-cars and servicing businesses.

In the UK sales fell 11.4 per cent to £2.05bn but trading profit rose 48.6 per cent to £42.8m.

“In 2010, we expect to benefit from continued market momentum in Hong Kong and Australia and stable industry in Belgium and Finland but we also continue to anticipate market declines in the UK, Greece, Singapore, Eastern Europe and Russia,” said chief executive Andre Lacroix.

He added: “We therefore remain cautious for 2010 and do not expect a global recovery to start until well into the second half of this year given consumer confidence is still weak and unemployment continues to rise in many of our key markets.”

British rival Lookers on Tuesday reported a doubling in 2009 profit and a strong start to 2010, while Pendragon said last month it had swung to a profit last year after a loss in 2008.

Inchcape shares, which plunged around 90 per cent in 2008, recouped about half of their losses last year as the group eased fears about its future by slashing costs and raising around £250m in a deeply discounted rights issue.

But the stock has been under pressure so far this year from concerns about its exposure to a weak economy in Greece and to a recall of Toyota cars on safety concerns.

The stock closed down 4.3 per cent at 29.5p yesterday, valuing the business at about £1.3bn.