Inchcape (LSE:INCH), the global automotive distributor, reported revenue of £4.7 billion for the six months to 30 June, up 9% on a reported basis and 7% at constant currency, against the comparable prior-year period.
Adjusted operating profit fell 2% in constant currency to £248 million, with margins down 40 basis points to 5.3%, as weakness in Australia offset margin gains in the Americas and Europe & Africa.
Adjusted pre-tax profit dropped 6% to £188 million on higher finance costs, while statutory pre-tax profit fell 33% to £124 million after £64 million of adjusting items, mostly restructuring costs in the Asia-Pacific region.
Volumes rose 9%, driven by recent distribution contract wins, with the group adding five new contracts so far this year and exiting 15 immaterial, dilutive contracts.
"We are making good progress on our management actions in APAC, with a focus on cost reduction, enhanced collaboration with our OEM partners and portfolio optimisation," said Duncan Tait, group chief executive.
The Americas delivered 13% organic revenue growth and margin expansion, while Europe & Africa grew 7% organically; APAC organic revenue declined 7% amid a weaker Australian market.
Net debt to EBITDA stood at 0.5 times, with free cash flow of £84 million and conversion of 65% to profit after tax.
Inchcape completed its acquisition of Bulgarian Mercedes-Benz distributor Silver Star and increased its share buyback programme by £75 million to £250 million, alongside an interim dividend of 10.8p, up 14%.
The company reiterated guidance for adjusted EPS growth above 10% in the full year, weighted toward the second half, with its next trading update due 22 October.
News Intelligence what this means for the company
Inchcape reported H1 revenue growth of 9% but adjusted operating profit fell 2% in constant currency, with margins compressed 40 basis points to 5.3% as Australian weakness offset gains elsewhere. The company raised its buyback to £250m and reaffirmed full-year EPS growth above 10%, weighted to H2—a signal of confidence despite current-period profit headwinds, though the guidance relies on a stronger second half to offset H1's margin pressure.
Profit decline amid revenue growth and margin compression in APAC signals operational stress that buyback and dividend increases do not resolve. The reaffirmed 10%+ EPS growth guidance is credible only if H2 delivers material margin recovery or cost actions in APAC gain traction; otherwise, the company is returning capital while core profitability deteriorates.
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