2019 Annual Results Announcment
Resilience and a year of strategic repositioning
Results for the year ended 31 December 2019
2019 Highlights
- Reported PBT of £402m up 256% y-o-y, reflecting 2019 gains on disposals and 2018 impairment charges
- Pre-exceptional PBT down 7.4% y-o-y in constant currency; stable y-o-y excluding transactional currency impact
- Underlying resilience of profit reflective of Distribution business model and diversification of operations
- Further strategic progress re-shaping the portfolio towards Distribution; first Daimler distribution contract wins
- Continued disciplined capital allocation; £100m buyback completed in 2019 and new £150m buyback for 2020
| Actual Currency Rates | FY 191 | FY 18 (Restated) 1 | Actual Currency YoY | Constant Currency YoY |
| Reported performance measures | ||||
| Revenue | £9,380m | £9,277m | +1.1% | +1.3% |
| Operating profit | £448.6m | £174.9m | +156% | |
| Profit before tax | £401.8m | £113.0m | +256% | |
| Basic EPS | 79.0p | 7.8p | +913% | |
| Dividend per share | 26.8p | 26.8p | 0.0% | |
| Pre-exceptional performance measures 2 | ||||
| Operating profit 3,4 | £373.1m | £398.6m | (6.4%) | (6.7%) |
| Operating profit 5 | £326.3m | £350.6m | (6.9%) | (7.4%) |
| Basic EPS | 59.9p | 63.8p | (6.1%) | |
| Distribution trading profit4 | £354.2m | £382.8m | (7.5%) | (7.8%) |
| Retail trading profit | £36.1m | £32.1m | +12.5% | +12.1% |
| Vehicle gross profit | £772.3m | £809.7m | (4.6%) | (4.8%) |
| Aftersales gross profit | £499.8m | £491.6m | +1.7% | +1.5% |
- IFRS 16 has been adopted on a fully retrospective basis, with all 2018 comparatives restated within this statement including segmental information. See note 13.
- These measures are Alternative Performance Measures, see note 14.
- FY 2019 operating exceptional income is £75.5m driven by gains on disposals, net of restructuring costs, asset write-offs and impairments associated with the disposals, and acquisition costs. FY 2018 operating profit included a primarily non-cash charge of £223.7m, comprising £211.1m of goodwill and asset impairment (UK & Europe; restated due to IFRS16), £5.4m of non-cash pension charge relating to GMP equalisation and £7.2m relating to acquisitions. See note 3.
- Our Central American acquisition generated £3.5m pre-exceptional trading profit over January to March 2019, i.e. prior to the acquisition’s first year consolidation annualisation as part of Inchcape Group.
- FY 18 adjusted profit before tax excludes a £13.9m exceptional non-cash finance cost relating to fair value adjustments against repayment of US Private Placement loans in 2009.
Stefan Bomhard, group CEO of Inchcape Plc, commented
Our performance in 2019 against the backdrop of challenging dynamics in several markets demonstrates the resilience in Inchcape’s business model.
Distribution continues to generate 91% of our trading profits and, setting aside the yen headwind, profit before tax, was flat year on year. Our businesses in Europe reported a strong performance and we saw underlying resilience in Australasia, and Asia growth despite the headwinds in Singapore and Hong Kong, offset by the impact of a contraction in the Chilean market. The supply constraints experienced in Australia and Ethiopia over the first half eased materially in the second half, improving our underlying performance. Our continuing Retail operations delivered a stable performance over the year.
The Ignite strategy has continued to drive growth and we made transformative strategic progress last year. We strengthened our portfolio, acquiring Distribution contracts in Uruguay, Ecuador, Colombia, Kenya and Lithuania and disposing of certain retail-only operations in China, Australia and the UK. The acquisitions in Latin America demonstrate the success of Inchcape’s OEM Partner of Choice focus, establishing our first Daimler distribution operations after more than 30 years of retail-only partnership, as well as illustrate Inchcape’s regional consolidation strategy. In addition, we achieved both our F&I income and procurement saving targets in 2019 and continued to develop our omnichannel capabilities through our trial in Australia, with the trial ready to be exported to a couple of other markets for further development in 2020.
Inchcape’s capital allocation process has remained disciplined, with excess cash returned to shareholders. We have today announced a new £150m buyback to be completed within the next 12 months.
We expect challenging market dynamics to continue through 2020, particularly in Singapore, Hong Kong and Chile, although we are encouraged by the outlook for our European businesses. In addition, we continue to monitor how the Coronavirus situation develops. Against this backdrop, we will continue to focus on near-term opportunities whilst driving our medium-term aspirations.
After five years as CEO I will be leaving Inchcape. This is a strong and sustainable business which I believe is well placed today and for the future. The weighting to markets with good structural growth prospects, focus on optimising performance, seizing investment opportunities, and long history of cash generation are set to continue our long track record of delivering attractive shareholder value.