Full Annual Report - Inchcape

Business review
Strategy
Group Chief Executive’s
strategic review
Inchcape is uniquely positioned
worldwide.We are a leading
independent international automotive
distributor and retailer who has
delivered a record cash performance
in the downturn by creating great value
from great brands.We are strongly
positioned for the global recovery.
André Lacroix
Group Chief Executive
Sales
£5.6bn
-10.8%
£4.5bn
£4.8bn
£6.1bn
£6.3bn
£5.6bn
Operating profit
before exceptional items
£175.2m
-27.2%
£189.4m
£213.9m
£265.0m
£240.5m
£175.2m
Cash generated
from operations
£336.7m
+83.3%
£195.4m
£236.8m
£293.0m
£183.7m
£336.7m
Inchcape is a leading independent,
international automotive distributor and
retailer, with scale operations in Australia,
Belgium, Greece, Hong Kong, Russia,
Singapore and the UK as well as operations
in 19 other markets.We represent some of
the world’s leading automotive brands with
whom we have long-standing relationships.
The Inchcape management team has
reacted decisively to the unprecedented
global slowdown in car sales witnessed in
the latter part of 2008 and in early 2009 by
focusing on five key operational priorities:
to build market share; to grow our aftersales
business; to reduce our costs; to manage
our working capital by controlling inventory;
and to limit capital expenditure to
committed strategic investments.
These actions, together with our decision
to strengthen our capital structure and
reduce debt through a Rights Issue
completed in April 2009 with the support of
our shareholders,has meant the Group has
ended 2009 in a significantly stronger
position than we entered it.
Inchcape is in a net cash position, has
gained share in many of its key markets, has
enjoyed a resilient aftersales performance
(approximately 50% of Group gross margin)
and has significantly reduced the cost of
doing business. Our operating cash flow
was the highest achieved since 2000 and
was almost twice our operating profit
(before exceptional items) as we reduced
our stock. Further, we have strengthened our
balance sheet which will enable the Group
to trade effectively, invest in working capital
and to take advantage of the upturn.
During the Company’s 160 plus year history,
Inchcape has invariably emerged from a
time of crisis stronger and more resilient.
Although we expect a continuation of
difficult trading conditions in many of our
markets until well into the second half of
2010, I am confident that we are uniquely
positioned as the global industry leader to
grasp the opportunities of recovery when
they emerge.
In that context, I would like to emphasise
why we believe that the medium to long
term outlook for Inchcape is very exciting.
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Inchcape plc ¦ Annual Report and Accounts 2009