Operating profits fell 17% in Inchcape’s retail division during 2023 although revenues rose slightly, while its international vehicle distribution divisions grew rapidly.
The division includes Inchcape’s handful of BMW dealerships in Poland plus its main Inchcape Retail business in the UK, which could be put up for sale – the group revealed in January that it is “reviewing strategic options for the UK Retail business, which potentially could include a sale”. Today it said this review remains at an early stage and a sell-off is not a certainty for Inchcape Retail UK, which represents Audi, BMW, Jaguar, Land Rover, Lexus, Mercedes-Benz, Mini, Porsche, Smart,
Toyota and Volkswagen.
London-based Inchcape plc’s financial results for 2023 show that its UK revenue was £2.065 billion, up from £2.029bn in 2022, however the proportion of the group’s entire revenue that is generated in the UK fell from 25% to 18% as Inchcape continues to put its focus on its overseas vehicle wholesale distribution businesses.
The whole retail division, including the Poland operation, grew revenues by 4% to £2.35bn although adjusted operating profit dropped 17% from £48 million to £40m, reflecting “a more normalised margin in used cars”, the company said. The group now makes less than 10% of its profit from its dealerships.
Inchcape’s total global revenue rose to £11.45bn in 2023 from £8.13bn the prior year. Inchcape’s overseas expansion included buying a 60% stake in the CATS Group of Companies, entering the Philippines and strengthening geographic reach and partnerships with Mercedes-Benz, Chrysler, Jeep, Dodge, Jaguar and Land Rover, plus buying a 70% stake in Mercedes-Benz’s Indonesian distribution business, and it acquired the SAIC Maxus distribution business in New Zealand and the ongoing operations of Auto Insure to expand its aftersales capacity in Singapore.
Chief executive Duncan Tait said: “We made substantial strategic progress last year, with a record number of distribution contracts won. These contracts, along with our investment in acquisitions, will continue to support the business as we grow in existing markets by building market share, expand into new markets, and develop our mobility company partner portfolio to drive growth.
“With our global market leadership position, disciplined approach to capital allocation, digital and data capabilities to support our mobility company partners and our highly cash-generative characteristics, Inchcape is well positioned for the future, and we remain confident about the medium to long-term outlook for the group.”
Group adjusted profit before tax rocketed 35% to £502m from £373m. Operating profit from continuing operations climbed 55% to £619m.