Inchcape (INCH) H1 2024 earnings summary

Executive summary

• Completed divestment of UK retail business for £346 million, transitioning to a pure-play automotive distributor and enhancing balance sheet capacity.

• Achieved 8% revenue growth in constant currency and 4% organic growth in H1 2024, with adjusted PBT of £226 million and strong balance sheet leverage at 0.7x.

• Increased share buyback program to £150 million, commencing August 2024, reflecting strong free cash flow.

• Secured four new distribution contracts in H1 2024, supporting growth in key markets.

• Maintained resilient operational and financial performance, supported by a diversified business model.

Financial highlights

• H1 2024 revenue reached £4.7 billion, up 8% in constant currency; organic growth contributed 4%, acquisitions 4%.

• Adjusted operating profit was £299 million (+7% constant currency); adjusted PBT was £226 million.

• Free cash flow of £226 million, with a 76% conversion rate from operating profit; net debt reduced to £524 million, leverage at 0.7x.

• Adjusted basic EPS at 34.7p, down 3% year-over-year; interim dividend per share set at 11.3p, up 7%.

• Operating margin at 6.3%; return on capital employed at 28%.

Outlook and guidance

• Reaffirmed moderated growth expectations for FY 2024 at constant currency, with higher growth anticipated medium to long term from market recovery, new contracts, acquisitions, and technology investments.

• Anticipates continued margin growth in APAC and improvement in Americas margins in H2 2024.

• Leverage expected to remain within 1x limit, supported by strong free cash flow and UK disposal proceeds.