Full Annual Report - Inchcape
Full Annual Report - Inchcape Full Annual Report - Inchcape
Business review Strategy Operating review continued Australasia Brand partners Spencer Lock Chief Executive Officer Inchcape Australasia Our Australasian segment encompasses our businesses in Australia and New Zealand. Key financial highlights Contribution to Group sales Contribution to Group profit Financial highlights Sales Year ended Year ended % change 31.12.2009 31.12.2008 in constant £m £m % change currency Retail 284.4 263.2 8.1% (1.8)% Distribution 478.4 456.1 4.9% (4.4)% Like for like sales Retail 270.5 252.1 7.3% (2.5)% Distribution 478.4 456.1 4.9% (4.4)% Trading profit Retail 11.2 8.9 25.8% 15.2% Distribution 26.7 33.3 (19.8)% (27.2)% Like for like trading profit Retail 10.6 8.8 20.5% 10.1% Distribution 26.7 33.3 (19.8)% (27.2)% Trading margin Retail 3.9% 3.4% 0.5ppt 0.6ppt Distribution 5.6% 7.3% (1.7)ppt (1.7)ppt Cash generated from operations Retail 17.8 5.9 201.7% Distribution 29.6 39.3 (24.7)% 13.7% 19.5% Sales £762.8m 6.0%* 2008: £719.3m Trading profit £37.9m 10.2%* 2008: £42.2m Operational highlights for the year • Record Subaru market share • Strong aftersales performance • Record retail operating profit • Successful launch of new Subaru Liberty and Outback.Forester leader in its segment *at actual exchange rates More online at www.inchcape.com/ourbusinessmodel/regions 24 Inchcape plc ¦ Annual Report and Accounts 2009
Section One Business review Franchised retail centres 18 The market The Australian market declined by 7.4% compared to 2008, despite government stimulus packages aimed at the business consumer that ended in December 2009. These stimulus packages supported the light commercial vehicles market in particular, which was down 1.5% compared to a decline of 7.9% in the passenger car segment. However the market rebounded in the second half in line with the improving Australian economy. In New Zealand, the total market declined 28.0% with commercial vehicles most affected and the passenger car market down 25.9%. Business model and strategy We are the distributor for Subaru in both Australia and New Zealand.We have represented Subaru in Australia since1973. In addition, we have multi-franchise retail operations based in Sydney, Melbourne and Brisbane.These operations hold franchises for Subaru,Volkswagen, Hyundai, Mitsubishi and Kia. To support these operations, we have a logistics business called AutoNexus, which is responsible for managing vehicle and parts inventory, distribution and vehicle refurbishment on behalf of Subaru Australia, and our retail business as well as other independent dealers. Our strategy for our distribution operations is to continue to grow market share through our superior Customer 1st business processes. Revenue is principally generated from vehicle sales, with aftersales a significant source of both revenue and gross margin. This strategy is supported by the development of market specific special editions and new product specification in conjunction with Subaru. Our retail operations are focused on delivering an outstanding customer experience for our brand partners and driving revenue from sales of new cars and vehicle parts. In addition, we generate revenue from used cars and through the sales of finance and insurance products. Our operating performance In both of our Australasian distribution businesses,we have continued to outperform the market and have grown share. Sales were down 4.4% in a market which was down by 7.9% and trading profit was 27.2% below 2008 at £26.7m,due primarily to a stronger Japanese Yen (JPY),with a solid trading margin of 5.6%. In retail,the business benefited significantly in 2009 from improved used car margins as a result of strong demand and lower inventory levels. In addition, a strong contribution from aftersales resulted in a trading profit 15.2% better than 2008 and a record trading margin of 3.9%. This strong trading profit performance and our continued focus on working capital across the segment resulted in cash generated from operations of £17.8m in retail and £29.6m in distribution. Outlook for 2010 The market in Australia was one of the more resilient in 2009 and we expect that the positive momentum in the fourth quarter together with improving economic conditions and market sentiment will lead to a small growth overall in the market in 2010. We expect Subaru to achieve market share improvements in both Australia and New Zealand as the benefit of a full year of new Outback, Liberty, Exiga and Outback diesel models is realised. We expect to see fluctuations in currency rates. However we have already put in place currency hedging to manage our JPY/AUD exposure on vehicle and parts purchases through to the end of the third quarter of 2010 and will implement coverage for the fourth quarter at the appropriate time. www.inchcape.com 25
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Business review<br />
Strategy<br />
Operating review continued<br />
Australasia<br />
Brand partners<br />
Spencer Lock<br />
Chief Executive Officer<br />
<strong>Inchcape</strong> Australasia<br />
Our Australasian segment encompasses our<br />
businesses in Australia and New Zealand.<br />
Key financial highlights<br />
Contribution to<br />
Group sales<br />
Contribution to<br />
Group profit<br />
Financial highlights<br />
Sales<br />
Year ended Year ended % change<br />
31.12.2009 31.12.2008 in constant<br />
£m £m % change currency<br />
Retail 284.4 263.2 8.1% (1.8)%<br />
Distribution 478.4 456.1 4.9% (4.4)%<br />
Like for like sales<br />
Retail 270.5 252.1 7.3% (2.5)%<br />
Distribution 478.4 456.1 4.9% (4.4)%<br />
Trading profit<br />
Retail 11.2 8.9 25.8% 15.2%<br />
Distribution 26.7 33.3 (19.8)% (27.2)%<br />
Like for like trading profit<br />
Retail 10.6 8.8 20.5% 10.1%<br />
Distribution 26.7 33.3 (19.8)% (27.2)%<br />
Trading margin<br />
Retail 3.9% 3.4% 0.5ppt 0.6ppt<br />
Distribution 5.6% 7.3% (1.7)ppt (1.7)ppt<br />
Cash generated from operations<br />
Retail 17.8 5.9 201.7%<br />
Distribution 29.6 39.3 (24.7)%<br />
13.7% 19.5%<br />
Sales<br />
£762.8m 6.0%*<br />
2008: £719.3m<br />
Trading profit<br />
£37.9m 10.2%*<br />
2008: £42.2m<br />
Operational highlights for the year<br />
• Record Subaru market share<br />
• Strong aftersales performance<br />
• Record retail operating profit<br />
• Successful launch of new Subaru<br />
Liberty and Outback.Forester leader<br />
in its segment<br />
*at actual exchange rates<br />
More online at www.inchcape.com/ourbusinessmodel/regions<br />
24<br />
<strong>Inchcape</strong> plc ¦ <strong>Annual</strong> <strong>Report</strong> and Accounts 2009
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