Inchcape Reports Resilient 2024 Results Amid Currency Headwinds
Why we think this is neutral
Inchcape's 2024 results present a mixed picture. On the positive side, the company achieved 4% revenue growth in constant currency and 5% growth in adjusted profit before tax. The strong free cash flow generation and significant reduction in net debt are particularly impressive. However, these gains were largely offset by substantial currency headwinds, resulting in a 1% decline in reported revenue and a 7% drop in adjusted basic EPS. The outlook for 2025 is cautiously optimistic, with expectations of continued growth, albeit with some challenges from mixed market momentum and competitive dynamics in certain markets. The initiation of a new £250m share buyback program signals confidence, but the H2-weighted growth expectation for 2025 adds a note of caution. Overall, while Inchcape demonstrates resilience and strong cash management, the currency impacts and market challenges balance out the positives, leading to a neutral sentiment.
Key Points
- Revenue up 4% in constant currency to £9.3bn, but down 1% reported due to currency headwinds
- Adjusted profit before tax up 5% in constant currency, down 5% reported
- Adjusted basic EPS down 7% to 71.3p
- Strong free cash flow of £462m, representing 151% conversion of profit after tax
- Significant reduction in adjusted net debt from £601m to £190m
- Resilient adjusted operating margins at 6.3%, down slightly from 6.6%
- New £250m share buyback programme announced
- Expectation of continued growth in FY 2025, with higher EPS growth
- Growth in FY 2025 expected to be H2-weighted
- Mixed market momentum and competitive dynamics noted in certain markets
Summary
Inchcape plc, the leading global automotive distributor, has reported its 2024 results showing resilience amid challenging currency conditions. Revenue grew 4% in constant currency to £9.3bn, with organic growth of 2%. However, reported revenue declined 1% due to currency headwinds. Adjusted profit before tax increased 5% in constant currency but fell 5% on a reported basis. The company demonstrated strong cash management with free cash flow of £462m and a significant reduction in adjusted net debt from £601m to £190m. Adjusted operating margins remained resilient at 6.3%, down slightly from 6.6%. Looking ahead, Inchcape expects continued growth in FY 2025, with higher EPS growth driven by profit growth and share buybacks. However, growth is anticipated to be H2-weighted, and the company notes mixed market momentum and competitive dynamics in certain markets. The initiation of a new £250m share buyback programme signals confidence in the business. Broker targets range from 652p to 1,120p, with a majority maintaining 'Buy' recommendations.