Inchcape profits slide as Brexit concerns weigh on sales

Car dealer Inchcape saw profits fall slightly last year, as stricter emissions laws, Brexit related uncertainties and a slump in UK auto production all helped pump the brakes on sales.

The FTSE 250 constituent, which operates in more than 24 countries, saw underlying pre-tax profits fall 2.6% to £356.8m in the year ended 31 December. Reported profits fell 56% due to a £211m of non-cash charges, mostly £198m of goodwill and asset impairments in the UK and Europe due to a contraction in trading margins.

Inchcape warned that any impact to trading from Brexit would be a risk to its retail business performance moving forward, with automakers and other manufacturers having recently highlighted the toll a no-deal Brexit could cause on their operations, including higher tariffs, disruptions to supply chains and threats to jobs.

In addition to the threats posed by Britain's impending separation from the European Union next month, Inchcape's sales were also offset by a 9% fall in UK car production in 2018 - the biggest drop since the 2008-9 recession.

Revenues as a whole grew 5.8% to £9.27bn, with global distribution revenues rising 6.6% to £4.99bn and retail revenues increasing 5% to £4.29bn.

Earnings per share soared 82% to 11.6p, while Inchcape kept its 26.8p full-year dividend unchanged.

Looking forward, chief executive Stefan Bomhard said: "Overall, as the automotive industry continues to evolve and with Inchcape's foundational strengths and stability in the face of change, I am confident that we will capitalise on the opportunities ahead."

Overall, he expects a resilient profit performance in 2019, excluding currencies of which there will be a large transactional yen headwind expect at around £35m. Cash generation remains a focus.

Distribution is expected to be resilient in Asia, Australasia and Emerging Markets but a strong performance in Europe. Retail should see strong growth in Russia while performance in the UK and Australia are predicted to be "more stable".

As of 0850 GMT, Inchcape shares had lost 2.61% to 578p.