Full Annual Report - Inchcape
Full Annual Report - Inchcape Full Annual Report - Inchcape
Business review Strategy Group Chief Executive’s strategic review continued Decentralised and empowered organisation I believe that this unique position also extends to the quality of our global and regional management teams, on whose personal judgement and freedom to make decisions so much depends. It is our people across the world who have enabled us to deliver a performance in 2009 that was ahead of our own expectations and which improved as the year progressed. Revenues declined year on year but due to our committed operational focus, we ended 2009 with a robust gross margin performance,strong cash flows, improved customer service globally and increased market share in many territories across the world. This performance was due, in no small part, to the tight management of our five key priorities – growing market share, growing aftersales, reducing costs, managing working capital, and selective capital expenditure investment – augmented by the in depth personal knowledge that our local management teams have of their markets. Our decentralised structure enables management to act swiftly with relevant, local, innovative propositions to meet the particular needs and preferences of their customer base, ensuring that a localised customer focus builds on our global strategy. High quality people are vital to ensure that the business model works, and I would like to thank all our employees for playing a fundamental role in delivering a record operating cash flow in 2009. 3 Decentralised and empowered organisation The unprecendented economic crisis brought out the best in our organisation, achieving success through a balanced approach to cost and cash initiatives as well as superior customer service and strong market share performance. Five Key Priorities Growing market share Reducing costs Managing working capital Growing aftersales Controlling capital expenditure 16 Inchcape plc ¦ Annual Report and Accounts 2009
Global experience Section One Business review The decline in new car sales that we saw begin in late 2008 was unprecedented.We immediately narrowed our management focus across the world to five key priorities. The speed and decisiveness with which we responded was the result of the many years collective industry experience and a deep personal understanding shared by our local managers of what really matters in their markets. As a result of actions taken at the end of 2008 and during 2009,we ended the year in a far stronger competitive and financial position than we entered it. Inchcape Group Executive Committee Outperforming the downturn – our Five Key Priorities 1 Growing market share 2 Growing aftersales 3 Reducing costs 4 Managing working capital 5 Controlling capital expenditure We have succeeded in improving customer service in all of our operations and gaining share in most of our key markets. Despite the downturn, our aftersales business has remained resilient thanks to the quality of our customer service, effective marketing campaigns and our approach to customer retention. We reduced like for like costs by c.£70m at constant currency during 2009, having taken the difficult decision to close 31 less profitable sites and reduce our workforce by 2,350 people. In reducing our inventory by 28.7% in comparison with the end of 2008, we were able to destock faster than we expected and release cash from working capital. Our investment activities have been selective and have focused on the opening of nine new strategic greenfield sites in key markets to reach large and valuable customer clusters. Market leader Share of gross margin Annualised benefit Inventory reduction Capital expenditure Number 1 in 14 markets c.50% Group gross margin c.£70m Like for like -28.7% Year on year -57.5% Year on year www.inchcape.com 17
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Global experience<br />
Section<br />
One<br />
Business<br />
review<br />
The decline in new car sales that we saw<br />
begin in late 2008 was unprecedented.We<br />
immediately narrowed our management<br />
focus across the world to five key priorities.<br />
The speed and decisiveness with which<br />
we responded was the result of the many<br />
years collective industry experience and<br />
a deep personal understanding shared by<br />
our local managers of what really matters<br />
in their markets.<br />
As a result of actions taken at the end of<br />
2008 and during 2009,we ended the year<br />
in a far stronger competitive and financial<br />
position than we entered it.<br />
<strong>Inchcape</strong> Group Executive Committee<br />
Outperforming the downturn – our Five Key Priorities<br />
1<br />
Growing<br />
market<br />
share<br />
2<br />
Growing<br />
aftersales<br />
3<br />
Reducing<br />
costs<br />
4<br />
Managing<br />
working<br />
capital<br />
5<br />
Controlling<br />
capital<br />
expenditure<br />
We have<br />
succeeded in<br />
improving customer<br />
service in all of our<br />
operations and<br />
gaining share<br />
in most of our<br />
key markets.<br />
Despite the<br />
downturn, our<br />
aftersales business<br />
has remained<br />
resilient thanks to<br />
the quality of our<br />
customer service,<br />
effective marketing<br />
campaigns and our<br />
approach to<br />
customer retention.<br />
We reduced like for<br />
like costs by c.£70m<br />
at constant<br />
currency during<br />
2009, having taken<br />
the difficult decision<br />
to close 31 less<br />
profitable sites<br />
and reduce our<br />
workforce by<br />
2,350 people.<br />
In reducing our<br />
inventory by 28.7%<br />
in comparison with<br />
the end of 2008,<br />
we were able to<br />
destock faster than<br />
we expected and<br />
release cash from<br />
working capital.<br />
Our investment<br />
activities have been<br />
selective and have<br />
focused on the<br />
opening of nine<br />
new strategic<br />
greenfield sites in key<br />
markets to reach<br />
large and valuable<br />
customer clusters.<br />
Market leader<br />
Share of gross margin<br />
<strong>Annual</strong>ised benefit<br />
Inventory reduction<br />
Capital expenditure<br />
Number 1<br />
in 14 markets<br />
c.50%<br />
Group gross margin<br />
c.£70m<br />
Like for like<br />
-28.7%<br />
Year on year<br />
-57.5%<br />
Year on year<br />
www.inchcape.com 17
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