Automotive distributor and retailer Inchcape Plc (INCH.L), Thursday, in its pre-close trading update for the full year 2009, said it expects to close the year slightly ahead of its expectations, reflecting a strong fourth quarter. However, Inchcape added that it continues to remain cautious for 2010.
For the 11 months to November 2009, total revenues were 11.4% below the prior year in actual currency and 17.5% below last year in constant currency. On a like-for-like basis, revenues were down 9.4% from fiscal 2008 in actual currency and down 15.6% in constant currency.
The London-based company noted that revenues in the second half of 2009 benefited from strong demand in New Cars in UK and the early signs of an industry recovery in Hong Kong and Australia.
Gross margin performance remains robust and it continues to benefit from good Used Car margins in several markets, while After Sales business, which represents half of its gross profit, is performing well, the company said.
Inchcape noted that its UK retail business is enjoying a stronger than anticipated fourth quarter. New Car sales were noted to be significantly ahead of 2008, reflecting the benefit from scrappage incentive scheme and from VAT increase in 2010 pulling forward demand in the premium sector. Margins on Used Cars currently continue to remain at the exceptionally high level that was seen in the first nine months of 2009, the company added.
In Europe, underlying demand for new vehicles remains weak, with markets in Eastern Europe and Russia continue to be challenging.
In the last two months, market recovery in Hong Kong was ahead of Inchcape's expectations and margin performance in Singapore is healthy despite an extremely weak market. In Australia, the company has seen early signs of an industry recovery where it continues to grow market share.
Inchcape said its financial position remains strong, maintaining its previous guidance of being broadly debt free at the end of 2009. Operating cash flow for the year is expected to be well ahead of last year, despite an unprecedented downturn in the global car market.
Commenting on the statement, chief executive officer André Lacroix said, "In 2009, the Group has improved customer service globally and we have gained share in many of our markets, while cutting costs and reducing inventory to mitigate the effects of an unprecedented global downturn in the car industry."
Looking ahead, Inchcape sees market conditions in 2010 to remain challenging. The company stated that it does not expect any global car industry recovery to start until well into the second half of 2010, as consumer confidence is still weak and unemployment continues to rise in many of our markets.
The company intends to announce its annual results for the year ended December 31, 2009 on March 10, 2010.
INCH is currently trading on the London Stock Exchange at 28.56 pence per share up 0.46 pence or 1.64% on a volume of 6.95 million shares. In the past 52-week period, the shares have been trading in a range of 11.25 pence to 85.25 pence.
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