Inchcape FY profit to beat market views after strong first half
Car dealership Inchcape said on Friday that its full-year pre-tax profit is set to be "significantly ahead" of market consensus of £216m after a better-than-expected performance in the first half.
The company said that since its first-quarter update at the end of April, encouraging trends across the business have continued and it has benefited both from an uptick in demand and margin resilience.
Inchcape cautioned that there is still a high level of uncertainty about the second half, both in terms of the pandemic and issues relating to supply due to shortages of semi-conductors, which have had a limited impact to date. Nevertheless, it expects the strong first half performance to underpin its full-year results.
At 0930 BST, the shares were up 4% at 793.25p.
Russ Mould, investment director at AJ Bell, said: "Inchcape CEO Duncan Tait is off to a very fast start. Since he took the wheel at the car distribution and dealership firm at the beginning of the July last year its shares are up more than 60%.
"How much credit he can take for this accelerated performance is open to question given the move has been fuelled by very supportive market conditions and the wider recovery in equities.
"Chip shortages have hit production of new cars, creating a very tight supply situation, while demand has been boosted as we move out of lockdown and as people are reluctant to use public transport to get around.
"It’s no wonder Inchcape is pointing to higher-than-expected profit, though notably this is still likely to be below pre-pandemic levels.
"Chip shortages could move from being a fuel injection to a speed bump if they mean Inchcape itself is struggling to source the cars people want and when they want them.
"Inchcape does at least benefit from a distribution-focused model and global diversification with its revenue streams running the gamut from new and used car sales, finance and insurance products to high-margin aftersales."