Inchcape's Q3 revenue rises, gains from weak pound

Automotive distributor and retailer Inchcape third quarter revenues increased as it benefitted from the weak pound.

In a trading update for the quarter ended 30 September, the FTSE 250 company reported that revenue increased by 15.3% to £2.01bn, or 4.8% at constant currency, compared to last year.

Like-for-like revenue was up 14.6% or 4.3% at constant currency and distribution revenue rose 19.5%, or 1.8% at constant currency. Retail revenue grew 12.5% or 7% at constant currency.

Chief executive Stefan Bomhard said the third quarter revenue performance was consistent with expectations for growth across regions and for a moderation from the rate of expansion seen over the first half of the year.

“Notwithstanding the adverse exchange rate between the Japanese yen and the Australian dollar and the difficult trading environment in our North Asia region, we continue to expect to deliver a resilient constant currency performance in 2016.”

Over three quarters of the company's profits are denominated in currencies other than sterling and reported currency performance benefited from the weak pound.

The more sluggish environment anticipated, the transactional currency pressure in Australia and uncertainty on the timing of a market recovery in North Asia might negatively impact trading in 2017.

Bomhard added: “I am excited about the long-term growth potential of Inchcape as we deliver on our five 'Ignite' strategic objectives: leading in customer experience, delivering the full potential from all of our revenue streams, becoming the original equipment manufacturers’ partner of choice, leveraging our global scale and investing to accelerate growth. 2016 has seen the creation of these objectives and the start of our actions to realise our full potential."

In the UK, LFL revenue rose by 7.3% due to increased operational focus on used cars and growth in aftersales, but there was a slowdown in the private new car market and lower gross margins on new vehicles.

In Europe, LFL revenue soared 24% with strong performances in Belgium, Greece and Finland.

In Australia, LFL revenue fell 0.2% due to a supply constraint for the Subaru business, which is easing in the fourth quarter and, as expected, foreign exchange headwinds were weighing on margins.

A new Subaru Impreza model is scheduled to launch in December.

For north Asia, LFL revenue decreased 17% due to a difficult trading environment in Hong Kong, although it did retain the number one market share position as consumer and corporate confidence remains subdued but stable.

LFL revenue increase by 16.9% in South Asia, with new market growth moderating in the second half of the year.

For emerging markets, LFL revenue climbed 3.4% following a strong performance in the first half of the year although political unrest in Ethiopia hurt trading.