Inchcape's strong distribution performance offsets poor retail showing

Inchcape grew group revenue 3.8% in actual currency to £4.6bn and said growth of 6.8% at constant currency rates was "encouraging". Pre-tax profits, however, tumbled 15.6% to £161.2m due to some exceptional costs, with underlying profit before tax growing 2% at constant currencies to £179.5m. Earnings per share slipped 18% to 26.9p.

Inchcape said the retail market performance reflected "significant vehicle margin pressure" in UK and Australia and, as expected, the unit had seen a 61% fall year-on-year in constant currency but said that comparatives looked set to ease in the second half.

The core distribution business's trading profit increased 21% in constant currency, thanks to a strong showing in Asia.

Group operating margins fell half a percent to 4.2%, reflecting the challenging trading environment in the UK and Australia retail and the prior year property profit, partially offset by Asia. The new Central America business contributed £5.3m of operating profit to the half year, in-line with expectations. Excluding the acquisition, pre-exceptional operating profit declined 4.0% in constant currency.

The FTSE 250 listed group confirmed its full-year guidance and continues to expect solid constant currency profit growth. The interim dividend was increased 13% to 8.9p per share.

Chief executive Stefan Bomhard said, "We have made good progress in distribution, the higher margin core of our business, over the first half of 2018, offsetting the expected challenges in our retail markets."

"The group's resilient first-half profit performance is broadly consistent with the phasing of our full year guidance and so we reiterate our expectation of a solid profit performance for the year as a whole," he added.

On the Ignite strategy, he said it had been the key driver in the push to further differentiate the company in all core areas of operation, as well as providing a strong foundation from which to grow both organically and through M&A.

"Most significantly, we continued our expansion in high growth potential markets with the acquisition in March of Grupo Rudelman and the Suzuki distribution contracts for Costa Rica and Panama. This was our second scale acquisition in Latin America in 18 months and also included the rights to distribute several Chinese automotive brands, further highlighting our commitment to building growth platforms for the future.

"Over the period Jaguar Land Rover awarded Inchcape new business in Colombia and, as announced today, have awarded Inchcape the distribution contract for Kenya. From January we also started to operate as the distributor for BMW in Guam."

As of 1000 BST, Inchcape share had gained 1.46% to 798.50p.