Inchcape Plc · LSE:INCH
Inchcape — H1 2010 Earnings Presentation
39 slides from Inchcape's earnings presentation, Jul 29, 2010
Slide 1: 2010 Interim Results
2010 Interim Results 29 July 2010
Slide 2: André Lacroix, Group Chief Executive
André Lacroix Group Chief Executive 2
Slide 3: Operational focus on our Top Five Priorities continues to deliver robust results
Operational focus on our Top Five Priorities continues to deliver robust results • Solid revenue growth: • +11.1% year on year at actual rates • +7.9% year on year at constant currency • Strong profit performance: • £115.2m PBT* • +76% year on year at actual rates • +68% at constant currency • Stron
Slide 4: Solid revenue growth given the strength of Inchcape's international portfolio
Solid revenue growth given the strength of Inchcape’s international portfolio and diversified revenue streams 3,200 28 3,100 112 3,000 43 103 £000 (130) 2,900 73 3 ,0 9 5 2,800 2 ,8 6 8 2,700 2,600 H1 2009 South Asia North Asia UK Europe Australasia Russia and Emerging H1 2010 M arkets +7.9% revenue
Slide 5: Strong operational leverage driven by focus on gross margin, cost and cash
Strong operational leverage driven by our day to day focus on gross margin, cost and cash H1 2010 H1 2009 ∆ Revenue 3,095.2 2,867.6 7.9% Gross profit 455.9 425.1 7.2% Gross margin 14.7% 14.8% (0.1)ppt Costs (332.2) (333.2) 0.3% Operating profit* 123.7 91.9 34.6% ROS 4.0% 3.2% 80BPS Interest & JVs (8
Slide 6: Most regions contributed to the strong operational leverage performance
Most regions contributed to the strong operational leverage performance Return on sales* H1 2009 & H1 2010 Change 3.2% Group +80 BPS 4.0% 4.6% Australasia +90 BPS 5.5% 4.7% North Asia +410 BPS 8.8% 9.8% South Asia -110 BPS 8.7% UK 2.0% +80 BPS 2.8% 2.5% Europe +90 BPS 3.4% Russia and 0.7% +270 BPS E
Slide 7: Robust first half recovery
Robust first half recovery Revenue Operating profit* 160.0 151.1 3.5 3.4 3.3 3.3 140.0 123.7 Sales £bn 3.2 3.1 3.1 120.0 £m 3.0 2.9 2.8 100.0 87.4 2.8 2.7 80.0 2.6 2.5 60.0 H1 2008 H1 2009 H1 2010 H1 2008 H1 2009 H1 2010 +11.1% +41.5% Profit before tax* Net cash/(debt) 140.0 130.3 84.9 80.0 115.2 12
Slide 8: Confidence in the Group's earnings recovery
Confidence in the Group’s earnings recovery • Stronger than expected PBT performance of £115.2m, 76% ahead of 2009 and 12% below the peak achieved in H1 2008 • Improved financial position with £84.9m of net cash and confidence in the Group’s cash generation moving forward • The Board intends to reco
Slide 9: Financial Results
Financial Results John McConnell Group Finance Director 9
Slide 10: Summary P&L
Summary P&L H1 2010 H1 2009 Change £m £m % Sales 3,095.2 2,785.7 11.1% Operating profit* 123.7 87.4 41.5% Net financing costs (8.5) (22.4) (62.1)% Profit before tax* 115.2 65.4 76.1% Tax rate (%) 28.9 30.7 (1.8)ppt Basic adjusted EPS (p)** 17.2 12.7 35.4% * Before exceptional items ** Adjusted for t
Slide 11: Impact of currency on operating profit
Impact of currency on operating profit* H1 2010 2009 @ actual 2010 @ 2009 2010 @ actual Impact exchange rates actual rates exchange rates Australasia 16.6 30.5 37.4 6.9 Europe 13.4 19.5 18.8 (0.7) North Asia 6.7 19.0 18.5 (0.5) South Asia 31.1 16.6 17.3 0.7 Russia and EM 3.4 9.7 8.6 (1.1) Total over
Slide 12: Segmental performance
Segmental performance H1 2010 H1 2009 Change % £m £m Sales Distribution 1,355.7 1,248.4 8.6% Retail 1,739.5 1,537.3 13.2% 3,095.2 2,785.7 11.1% Operating profit* Distribution 91.2 64.2 42.1% Retail 40.6 26.6 52.6% Central costs (8.1) (3.4) 138.2% 123.7 87.4 41.5% Operating margin* Distribution 6.7%
Slide 13: Distribution: trading profit, margin and cash flow
Distribution: trading profit, margin and cash flow Trading profit* Trading margin* Operating cash flows H1 2010 H1 2009 H1 2010 H1 2009 H1 2010 H1 2009 £m £m % % £m £m Australasia 29.7 12.8 8.2% 5.9% 34.5 24.0 Europe 17.9 14.5 4.0% 3.5% (2.8) 63.7 North Asia 18.5 6.7 8.8% 4.7% 6.7 36.9 South Asia 17
Slide 14: Distribution: underlying segmental profit
Distribution : underlying segmental profit 100.0 15.2 7.3 90.0 80.0 3.4 1.0 (7.5) 9.6 70.0 11.8 60.0 50.0 £m 9 1. 4 9 1. 2 (13.8) 40.0 30.0 6 4 .2 20.0 10.0 - H1 2 00 9 So ut h A sia No rt h A sia A ust ralasia Euro p e UK Russia & EM H1 2 010 Romanian land A ust ralian H1 20 10 und erlying imp airm
Slide 15: Retail: trading profit, margin and cash flow
Retail: trading profit, margin and cash flow Trading profit* Trading margin* Operating cash flows H1 2010 H1 2009 H1 2010 H1 2009 H1 2010 H1 2009 £m £m % % £m £m Australasia 7.7 3.8 4.0% 2.7% 6.9 14.2 Europe 0.9 (1.1) 0.9% (1.0)% 0.2 6.2 UK 28.5 17.9 2.6% 1.8% 50.0 47.6 Russia and Emerging Markets 3
Slide 16: Regional analysis: Underlying trading profit
Regional analysis: Underlying trading profit H1 2010 H1 2009 Russia and Emerging Russia and Emerging Markets Markets 4% 12% Australasia 18% Australasia UK 23% 22% UK 24% North Asia 7% £132.0m £90.8m Europe North Asia 15% Europe 14% 14% South Asia South Asia 34% 13% * Note: trading profit excludes ce
Slide 17: Cash flow
Cash flow Operating cash flow H1 10 H1 09 Free cash flow H1 10 H1 09 Net cash H1 10 H1 09 £m £m £m £m £m £m Operating profit** 123.7 87.4 Operating cash flow 121.3 288.9 Free cash flow 86.4 188.4 Depreciation / amortisation 23.3 17.1 Net interest (4.8) (26.5) Share issue - 234.3 Working capital (21.
Slide 18: Net financing costs
Net financing costs H1 2010 H1 2009 £m £m Bank and loan interest (0.5) 3.4 Stock holding interest 7.0 5.0 Interest on private placement notes 1.6 6.3 Pension interest net (0.2) (2.6) Other including capitalised interest adj. (1.9) 6.4 Interest excluding mark to market 6.0 18.5 FV on private placemen
Slide 19: Guidance – Full Year 2010
Guidance – Full Year 2010 • Tax rate 29% • Interest cost £12-£15m (excl. mark to market) • Capital expenditure £50-55m • Net cash Broadly similar position to half year of £85m
Slide 20: Business update and outlook
Business update and outlook André Lacroix Group Chief Executive 20 20
Slide 21: Focus on our Top Five Priorities will remain in place
Focus on our Top Five Priorities will remain in place to further improve Inchcape’s competitive position Strategy Growing Growing Commercial market share aftersales initiatives Improving Controlling Selective capital Cash margin working capital expenditure initiatives 21
Slide 22: 2010 Outlook
2010 Outlook • We expect the continuation of an uneven global recovery: • European Governments’ austerity measures could affect consumer confidence and slow down the global recovery that is being driven by sustainable growth momentum in Asia and the Emerging Markets • New cars in H2, we expect… • Co
Slide 23: Toyota recall update
Toyota recall update Key Facts H2 Focus • Inchcape car parc: 1.1m Sales and marketing focus on new product • Vehicles affected: 122k launches (Auris Hybrid) and brand • Customer enquiries: 6% communication programme to rebuild trust • Repaired vehicles: 80% with conquest buyers of the year Inchcape
Slide 24: UK Retail
UK Retail Strong revenue growth and record ROS 2010 TIV est. H1 actual: 1.1m, +20% vs. 2009 FY estimate: 2.0m, flat vs. 2009 H1 2010 • Continued to grow market share through superior Inchcape Advantage Customer 1st processes and capitalising on strong new achievements product launches. • Improved gr
Slide 25: Europe
Europe Resilient performance despite challenging conditions in Greece and the Toyota recall Belgium Greece 2010 TIV est. H1 actual: 351k, +16% vs. 2009 H1 actual: 105k, -13% vs. 2009 FY estimate: 576k, +9% vs. 2009 FY estimate: 150k, -36% vs. 2009 H1 2010 • Good growth in both Vehicle sales and Afte
Slide 26: South Asia
South Asia Solid ROS of 8.7% despite significant market decline Singapore 2010 TIV est. H1 actual: 30k, -33% vs. 2009 FY estimate: 50k, -38% vs. 2009 H1 2010 • Launch of Camry Hybrid and Vios achievements • Leading hybrid segment growth with Toyota and Lexus Synergy Drive • Strong Aftersales perform
Slide 27: North Asia
North Asia Toyota the fastest growing brand in H1 2010 Hong Kong 2010 TIV est. H1 actual: 18k, +58% vs. 2009 FY estimate: 35k, +30% vs. 2009 H1 2010 • Increased Toyota market share as we leveraged another strong period of new product launches: Toyota Prado, achievements Previa, Noah, Mazda6 and Jagu
Slide 28: Australasia
Australasia Strong earnings recovery and record ROS of 4.0% in Retail Australia Distribution Australia Retail 2010 TIV est. H1 actual: 531k, +17% vs. 2009 FY estimate: 990k, +6% vs. 2009 H1 2010 • Achieved 4.0% share in H1 vs. 3.9% in 2009 • Strong performance on New and Used vehicle sales and achie
Slide 29: Russia
Russia Well positioned for the market recovery in H2 2010 TIV est. H1 actual: 791k, +3% vs. 2009 H1 foreign brands: 519k, -4% vs. 2009 FY estimate: 1.6m, +13% vs. 2009 FY foreign brands: 1.1m, +10% vs. 2009 H1 2010 • Driving market share with Inchcape Advantage achievements • Focus on growing Afters
Slide 30: Emerging Markets – Eastern Europe
Emerging Markets – Eastern Europe Strong profit increase despite uneven market recovery The Baltics The Balkans Poland 2010 TIV est. H1 actual: 12k, -7% vs. 2009 H1 actual: 65k, -29% vs. 2009 H1 actual: 154k, -4% vs. 2009 FY estimate: 23k, flat vs. 2009 FY estimate: 120k, -33% vs. 2009 FY estimate:
Slide 31: Emerging Markets – Rest of the world
Emerging Markets – Rest of the world Strong profit increase despite uneven market recovery South America Africa China 2010 TIV est. Chile: Data not available H1 actual: 5.5m, +47% vs. 2009 H1 actual: 125k, +89% vs. 2009 Peru: H1 actual: 52k, +52% vs. 2009 H1 2010 • Rebuilding of margins following a
Slide 32: Uniquely positioned worldwide
Uniquely positioned worldwide to take advantage of the global recovery Inchcape operates retail and distribution businesses on a global scale 32
Slide 33: Inchcape in fastest-growing economies moving forward
Inchcape in 21 fastest-growing economies moving forward Inchcape % Inchcape % Inchcape Yearly GDP Yearly TIV markets Revenue Trading profit growth growth 2006-09 2006-09 2009-14 2009-14 (Source: IMF) (Source: Global Insight) Asia-Pacific & 21 41% 62% +13.6% +6.6% Emerging Markets UK & Europe 5 59% 3
Slide 34: Inchcape
® Inchcape Uniquely positioned
Slide 35: Appendices
® Inchcape Appendices Uniquely positioned
Slide 36: Definitions
Appendix V – Definitions Definitions Like-for-like The following are excluded from like-for-like sales: 1. Businesses that are acquired, from the date of acquisition until the 13th month of ownership 2. Businesses that are sold or closed 3. Retail centres that are relocated from the date of opening
Slide 37: Broad geographic spread – truly international
Broad geographic spread – truly international United Kingdom (MLP) R Australasia South Asia North Asia Europe 37% of ’09 Group Revenue 14% of ’09 Group Revenue 10% of ’09 Group Revenue 6% of ’09 Group Revenue 18% of ’09 Group Revenue 24% of ’09 Group Trading profit 19% of ’09 Group Trading profit 29
Slide 38: Disclaimer
Disclaimer The information and opinions contained in this presentation are provided as at the date of the document. Certain statements in this presentation, particularly those regarding the future prospects of Inchcape plc (“Inchcape”), returns, pricing, acquisitions, divestments, industry growth or
Slide 39: Inchcape
® Inchcape Uniquely positioned