First half 2020 results
30 July 2020
Duncan Tait
Group CEO
Gijsbert de Zoeten
Group CFO
Income statement
Change yoy% | Covid-19 had a material impact | |||||
£m (unless otherwise stated) | 1H20 | 1H19 | Reported | Constant FX | Organic | |
• Topline outperformance vs market | ||||||
Revenue | 3,019 | 4,725 | (36)% | (35)% | (29)% | volumes |
Operating profit | 28 | 180 | (84)% | (84)% | • Market closures had a significant | |
Operating margin % | 0.9% | 3.8% | (290)bps | (290)bps | impact on results | |
Profit before tax | 9 | 156 | (94)% | (94)% | • Exceptional charges of £198m; majority | |
Basic adjusted EPS (p) | (0.6) | 28.6 | (102)% | (£185m) related to impairment | ||
of goodwill (Retail) and various sites | ||||||
Dividend per share (p) | - | 8.9 | (100)% | |||
NB. all figures are stated pre-exceptional items
First half 2020 results - 30th July 2020 | 4 |
Distribution
Change yoy% | |||||
£m (unless otherwise stated) | 1H20 | 1H19 | Reported | Constant FX | Organic |
Revenue | 1,730 | 2,421 | (29)% | (27)% | (29)% |
Operating profit | 46 | 160 | (71)% | (71)% | |
% margin | 2.7% | 6.6% | (390)bps | (400)bps | |
Results hit by wide-spread market closures
- Geographic diversification helped support performance
- Positive operating profit albeit at lower levels
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Distribution operating profit bridge
160
58
24
11
18
46
3
1H19 | Asia | Australasia | Europe | Americas & Africa | Translation FX | 1H20 |
operating profit | operating profit |
NB. figures above are quoted in £m
First half 2020 results - 30th July 2020 | 6 |
Retail
Change yoy% | |||||
£m (unless otherwise stated) | 1H20 | 1H19 | Reported | Constant FX | Organic |
Revenue | 1,289 | 2,304 | (44)% | (43)% | (30)% |
Operating profit | (18) | 20 | (188)% | (190)% | |
% margin | (1.4)% | 0.9% | (230)bps | (230)bps | |
The two key markets impacted by prolonged closures
- UK and Russia (>90% of the segment's sales) impacted by >10 weeks of closures
- Limited flexibility of costs weighed on performance
First half 2020 results - 30th July 2020 | 7 |
Cash flow: very effective inventory management
Net cash bridge (£'m)
Free-cash flow = £(5)m vs £25m in 1H19
2212
2813
38 | ||||||||
32 | ||||||||
16 | 0 | |||||||
9 | ||||||||
103 | ||||||||
32 | 89 | |||||||
Opening Net Cash @ Dec-19 [IAS17] | Operating profit | D&A net of lease payments | Working capital | Pension/ NCI/ Other | Net interest and tax | Net capex | Net M&A | Dividends | Share buybacks | FX / Other | Closing Net Cash @ Jun-20 [IAS17] |
Supported by collaboration with OEMs
- Lower operating profit offset by strict working capital discipline, and reduced capex and taxes
- Inventory management in collaboration with our OEM partners
- Dividend and share buyback cancellations helped preserve cash
NB. Closing (net debt) on an IFRS16 basis was £(262)m at end of June-2020; compares to £(250)m at Dec-2019
First half 2020 results - 30th July 2020 | 8 |
Liquidity update: strong balance sheet
Net cash | £103m | £(187)m | £(210)m | £89m |
Total Liquidity | £889m | £600m | >£700m | >£1,000m |
530 | |||
480 | |||
31-Dec-19 | 07-Apr-20 | 20-May-20 | 30-Jun-20 |
Available cash | RCF headroom | CCFF headroom | |
Liquidity position further strengthened
- Liquidity of >£1,000m vs £889m in Dec-19
- Collaboration with OEMs has supported the liquidity position during market lockdowns
- Repaid UK CCFF (£100m) in July; liquidity remains available until Dec-20
First half 2020 results - 30th July 2020 | 9 |
Covid-19 update: key market status
Asia-Pac
Europe
Americas & Africa
7th April | 21st May | Status today |
Australia
Hong Kong
Singapore
Belgium
Greece
Romania
Russia
UK
Chile
Colombia
Peru
Costa Rica
Ethiopia
Market status (today)
- Open: 30 markets
- Closed: 3 markets
Open
Key:
Closed
Group
(open markets | 30% | 40% | 95% |
% 2019 revenues) |
First half 2020 results - 30th July 2020 | 10 |
Sales trend gradually improving as markets reopen
Group organic revenue growth (yoy%) development
1Q20: | Apr-20 | May-20 | Jun-20 |
(6)%
(18)%
2Q20: | Aftersales sales growth | ||||||||
(51)% | c.20% above Vehicles | ||||||||
(59)% | |||||||||
(76)% | |||||||||
• | Jan-Feb: performance | • | Markets representing c70% | • | Markets representing c60% | • | Markets (mainly Americas) | ||
ahead of internal | of revenues were closed | of revenues were closed | representing c10% of | ||||||
expectations | • | Singapore closed in early- | • | European Distribution | revenues were closed | ||||
• | March: initial impact of | April | operations started to | • | Singapore and UK | ||||
closures (outside of Asia) | reopen in mid-May | reopened | |||||||
started to be felt | |||||||||
First half 2020 results - 30th July 2020 | 11 |
Market context for cost-restructuring
Inchcape markets: new car volume evolution
IHS Automotive forecasts (July)
(29)%
14%
2019 | 2020 | 2021 |
First half 2020 results - 30th July 2020 | 12 |
A leaner organisation, fit for focused growth
2019-PF1 | Overhead | Restructuring | ||
overheads | savings | costs | ||
£855m | >£90m | c.£70m |
Following significant | Reducing headcount (10%), | Process well-underway |
Retail disposals | third-party spend and | |
footprint rationalisation | ||
c.50% of savings retained when | Cash-cost c.£50m | |
revenue recovers |
1) 2019-PF: 2019 reported figure adjusted for disposals and acquisitions
First half 2020 results - 30th July 2020 | 13 |
Digital: continuing our investment
Key digital milestones in 1H20
- Digital leads drove > 9,000 orders
- Increased efficacy of digital marketing
- Completed testing on multi-brand & language platform
Current digital priorities
- Omni-channel: roll-outMelbourne-trial to other markets
- Analytics: use digital information and data to drive decisions
First half 2020 results - 30th July 2020 | 14 |
M&A: alive to the consolidation opportunity
OEM
Partner
Establishing a strong platform in a new geography
Platform
dealStrategic move to enter a new geography and leverage our global scale
e.g. Indumotora (2016) & Rudelman (2018) - Americas
Leveraging existing regional infrastructure | |
Smaller | |
scale | Strengthens our regional presence and broadens our brand exposure |
e.g. BMW Estonia (2017) & JLR Colombia (2018) | |
Selling | Inchcape | OEM looking for a new distribution partner | |
Distributor | Contract | ||
win | Enabler for entry into new markets and broadening our brand exposure | ||
e.g. BMW Guam (2018), Daimler Latam (2019, 2020) & JLR Poland (2020) | |||
First half 2020 results - 30th July 2020 | 15 |
Capital allocation: maintaining our discipline
1
Invest in the business
Capex for organic growth and
technological investment
Retain focus on portfolio optimisation
4
Share buybacks
Suspended due to Covid-19
Policy: distribute excess FCF
(post-dividend and M&A) via buybacks
Strong
balance sheet
Net debt to EBITDA
of max 1x (pre IFRS16)
2
Dividends
To be resumed when appropriate
Policy: 40% annual payout of basic EPS
(pre exceptionals)
3
Value accretive M&A
Required return targeted
in years 2-4
First half 2020 results - 30th July 2020 | 16 |
Outlook: continued resilience
Market outlook | Strategic focus |
• | Markets remain dynamic | • Continue to outperform market volumes | |
• Underlying strength of recovery is unclear | • | Becoming leaner and stronger | |
• | Possibility of a second-wave | • | Capitalising on opportunities |
2020 outlook:
Too early to provide a forward-looking view
First half 2020 results - 30th July 2020 | 17 |
Duncan Tait
Group CEO
Investment proposition: growth and cash returns
Distribution at our core: A highly cash generative and sustainable business model
Strong and increasing weighting to higher growth markets supports our diversification
Ignite strategy driving organic performance ahead of market growth
Continued consolidation a material driver of value creation
Sustainable business model well placed to benefit from future industry trends
Well positioned to deliver shareholder value through organic growth, consolidation and cash returns
First half 2020 results - 30th July 2020 | 19 |
Initial thoughts: Covid-19, the great accelerator
Dial-up use of | Drive | Globalise | Deliver the | |||
consolidation in | processes | 'Inchcape | ||||
data & digital | ||||||
distribution | & smart centres | Way' | ||||
Drive insights, | Help existing, | Use shared | Accelerate |
efficiencies and | and new, | services and | development |
growth | partners grow | automation to | by further |
across a range | improve | investing in our | |
of markets | profitability | people |
Continuing to help our OEM partners grow
First half 2020 results - 30th July 2020 | 20 |
Q&A
Appendix
Supporting our communities
Europe | APAC | Americas |
Provision of vehicles | Public awareness campaign | Vehicle support for the |
to Red Cross | in early stages of outbreak | Ministry of Health |
First half 2020 results - 30th July 2020 | 23 |
Segmental restatements
Old | New | |||||||||||||||||
AS REPORTED | REVISED DISCLOSURE | |||||||||||||||||
Distribution | Retail | Group | Distribution | Retail | Group | |||||||||||||
1H19 | FY19 | 1H19 | FY19 | 1H19 | FY19 | 1H19 | FY19 | 1H19 | FY19 | 1H19 | FY19 | |||||||
Revenue | Revenue | |||||||||||||||||
Asia | 865.8 | 1,681.9 | 865.8 | 1,681.9 | Asia | 784.1 | 1,522.5 | 81.7 | 159.4 | 865.8 | 1,681.9 | |||||||
Australasia | 500.5 | 1,036.3 | 185.1 | 306.7 | 685.6 | 1,343.0 | Australasia | 517.2 | 1,070.9 | 168.4 | 272.1 | 685.6 | 1,343.0 | |||||
UK & Europe | 660.5 | 1,329.6 | 1,610.7 | 3,004.9 | 2,271.2 | 4,334.5 | APAC | 1,301.3 | 2,593.4 | 250.1 | 431.5 | 1,551.4 | 3,024.9 | |||||
Emerging M arkets | 459.3 | 993.5 | 443.2 | 1,026.8 | 902.5 | 2,020.3 | UK & Europe | 660.5 | 1,329.6 | 2,053.9 | 4,031.7 | 2,714.4 | 5,361.3 | |||||
Total | 2,486.1 | 5,041.3 | 2,239.0 | 4,338.4 | 4,725.1 | 9,379.7 | Americas & Africa | 459.3 | 993.5 | 459.3 | 993.5 | |||||||
Total | 2,421.1 | 4,916.5 | 2,304.0 | 4,463.2 | 4,725.1 | 9,379.7 | ||||||||||||
Trading profit | ||||||||||||||||||
Asia | 93.2 | 181.9 | 93.2 | 181.9 | Operating Profit | |||||||||||||
Australasia | 32.2 | 60.8 | 0.3 | (1.4) | 32.5 | 59.4 | Asia | 86.1 | 168.7 | 4.1 | 8.7 | 90.2 | 177.4 | |||||
UK & Europe | 21.0 | 43.7 | 11.7 | 17.5 | 32.7 | 61.2 | Australasia | 30.4 | 58.0 | 0.4 | (1.2) | 30.8 | 56.8 | |||||
Emerging M arkets | 25.2 | 67.8 | 7.4 | 20.0 | 32.6 | 87.8 | APAC | 116.5 | 226.7 | 4.5 | 7.5 | 121.0 | 234.2 | |||||
Total | 171.6 | 354.2 | 19.4 | 36.1 | 191.0 | 390.3 | UK & Europe | 19.8 | 41.7 | 15.5 | 32.2 | 35.3 | 73.9 | |||||
Americas & Africa | 23.5 | 65.0 | 23.5 | 65.0 | ||||||||||||||
Central Costs | (11.2) | (17.2) | Total | 159.8 | 333.4 | 20.0 | 39.7 | 179.8 | 373.1 | |||||||||
Operating Profit | 179.8 | 373.1 | ||||||||||||||||
First half 2020 results - 30th July 2020 | 24 |
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Inchcape plc published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2020 07:25:06 UTC