Full Annual Report - Inchcape

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Business review Strategy Operating review continued North Asia Brand partners Patrick Lee Managing Director Inchcape North Asia Our North Asia segment contains the Group’s vertically integrated retail (VIR) operations in Hong Kong,Macau,Guam and Saipan. Key financial highlights Contribution to Group sales Contribution to Group profit Financial highlights Year ended Year ended % change 31.12.2009 31.12.2008 in constant £m £m % change currency Sales Distribution 312.2 378.5 (17.5)% (31.3)% Like for like sales Distribution 301.0 352.7 (14.7)% (29.0)% Trading profit Distribution 19.9 38.7 (48.6)% (57.2)% Like for like trading profit Distribution 19.2 35.0 (45.1)% (54.3)% Trading margin Distribution 6.4% 10.2% (3.8)ppt (3.9)ppt Cash generated from operations Distribution 50.1 35.6 40.7% 5.6% 10.3% Sales £312.2m 17.5%* 2008: £378.5m Trading profit £19.9m 48.6%* 2008: £38.7m Operational highlights for the year • Maintained market leadership position • Strong growth in aftersales through innovative marketing programmes • Inchcape in Hong Kong awarded the Toyota Triple Crown for 17 consecutive years *at actual exchange rates More online at www.inchcape.com/ourbusinessmodel/regions 28 Inchcape plc ¦ Annual Report and Accounts 2009
Section One Business review The market While the market in Hong Kong declined by 28.3% versus 2008, an improvement was seen with the fourth quarter being 40% higher than the same period in 2008, as general sentiment improved in line with economic conditions. In Guam and Saipan the markets followed a similar pattern to Hong Kong with improving conditions leading to growth in the fourth quarter. However overall the markets were 9.9% and 20.4% down respectively on 2008. Business model and strategy In Hong Kong and Macau, we are the distributor for Toyota, Lexus, Hino Trucks, Daihatsu, Jaguar and Mazda.We operate VIR for these brand partners in this market. Inchcape has been market leader in Hong Kong for over 20 years and has won the Triple Crown award (in recognition of outstanding customer service, retail excellence and innovation) from Toyota Motor Corporation for 17 consecutive years, the only company in the world to have done so over such an extended period. In Guam we are the market leading distributor and retailer for Toyota, Lexus, Chevrolet and Scion and in Saipan we are distributor and retailer for Toyota and Lexus. Our operating performance However, our North Asia segment delivered strong cash flow which at £50.1m was 40.7% better than 2008, driven by a reduction in working capital. Outlook for 2010 We expect the markets in this segment to continue their gradual recovery in 2010. In Hong Kong and Macau we will leverage another strong year of new product launches from Toyota, Lexus, Mazda and Jaguar to strengthen our competitive position. Further we will continue our growth momentum in aftersales performance through innovative marketing programmes and added value packages whilst maintaining a tight control on costs. Franchised retail centres 21 Inchcape’s market share in Hong Kong of 28.9% was lower than the previous year as a result of aggressive pricing promotions by European competitors who were destocking earlier in the year, a weak performance of the commercial vehicle segment and supply issues in the fourth quarter. These extremely challenging trading conditions particularly in Hong Kong led to a sales decline of 31.3% with trading profit falling by 57.2% and a trading margin of 6.4%. www.inchcape.com 29
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Section Four Shareholder informatio
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