Revenue rises at Inchcape as it acquires Estonia business

Independent multi-brand automotive distributor and retailer Inchcape announced on Thursday that it has entered into an agreement to acquire “premium Estonian automotive operations”, focused on “exclusive distribution” for BMW Group, from United Motors.

The FTSE 250 company said the acquisition would complement its existing operations in Estonia, where the group currently represented Jaguar, Land Rover and Mazda.

It said the transaction enhanced Inchcape's organic growth prospects in the Estonian market, consistent with the ‘Ignite’ strategic objective of investing to accelerate growth.

Additionally, the board said the deal built on its existing regional presence for BMW in Latvia and extended its global partnership with the German carmaker to an eighth market.

The business to be acquired operated from four retail locations in Tallinn, Tartu, Pärnu and Kohtla-Järve, representing BMW in each location and Kia at two.

Inchcape said the transaction remained subject to customary conditions, and was expected to complete during June.

“We are delighted by the opportunity to operate for BMW in Estonia, strengthening our Baltics presence and demonstrating continued momentum behind our Ignite strategy as we deliver on our objective of becoming the OEM's partner of choice,” said group CEO Stefan Bomhard.

“Estonia has attractive long-term growth prospects and I am excited to add further scale to our existing platform, enabling the group to deploy best practice and better leverage our regional scale. I strongly believe this deal will drive value creation for our shareholders and partners.”

Solid revenue rises in first four months

At the same time, Inchcape updated the market on its trading for the four months to 30 April, reporting group revenue of £2.91bn - an increase of 17.9% at actual currency and 8.1% at constant currency.

Distribution revenue was up 30.0% at actual currency and 14.8% at constant currency, the board said, while retail revenue was up by 9.8% at actual currency and 3.4% at constant currency.

“Our performance in the first four months of 2017 is consistent with our expectation for growth across the majority of our markets,” Stefan Bomhard commented.

“Our emerging markets distribution operations performed robustly, and benefitted from the strategic South American acquisition made at the end of 2016.

“Pleasingly, and in-line with our Ignite strategic objective of delivering the full potential on all our revenue streams, we delivered growth across our value drivers.”

Bomhard said the company had a “strongly cash generative” business model which enabled it to drive organic and inorganic growth within its “disciplined” capital allocation framework.

“I believe the recent business development activity demonstrates the exciting opportunity for value-enhancing consolidation in our highly fragmented industry.

“The 2017 distribution additions of PSA in Australia and BMW in Estonia reflect our Ignite strategy in action, working closely with OEMs to target exciting growth opportunities as we seek to be the OEM's partner of choice.”