Inchcape Plc · LSE:INCH
Inchcape — FY2020 Earnings Presentation
37 slides from Inchcape's earnings presentation, Feb 25, 2021
Slide 1: Full year 2020 results
Full year 2020 results 25 February 2021
Slide 2: Duncan Tait, Group CEO
Duncan Tait Group CEO \
Slide 3: Agenda
Agenda Strategic update Overview of 2020 2020 financial details and Outlook Full year 2020 results – 25th February 2021 3
Slide 4: 2020 highlights
2020 highlights Decisive cost action + Further portfolio Advanced our strengthened financial position rebalancing technological progress R D £90m cost-restructuring Added four new Omni-channel platform substantially complete Distribution businesses roll-out accelerated Effective cash-flow Disposal o
Slide 5: 2020 headline KPIs
2020 headline KPIs Topline Profitability Cash Shareholders Revenue Operating margin Free Cash Flow Underlying EPS £6.8bn 2.4% £177m 23.6p (2019: 4.0%) (19)% £129m 107% 6.9p Organic sales growth PBT FCF conversion DPS (proposed) Figures are stated pre-exceptionals Full year 2020 results – 25th Februa
Slide 6: Navigating Covid in 2020
Navigating Covid in 2020 Key markets 1Q20 2Q20 3Q20 4Q20 How we’ve adapted Australia Asia-Pac Hong Kong Implemented click & collect; offering Singapore physically distanced delivery service Belgium Greece Europe Romania Added online payment capability Russia (for both vehicles and aftersales) UK Chi
Slide 7: Gijsbert de Zoeten, Group CFO
Gijsbert de Zoeten Group CFO \
Slide 8: 2020 results: encouraging bounce-back in H2
2020 results: encouraging bounce-back in H2 H1 H2 FY 2019 2020 2019 2020 2019 2020 Revenue £4.7bn £3.0bn £4.7bn £3.8bn £9.4bn £6.8bn Organic growth % (29)% (9)% (19)% Operating margin % 3.8% 0.9% 4.2% 3.6% 4.0% 2.4% PBT £156m £9m £170m £120m £326m £129m Figures are stated pre-exceptionals Full year
Slide 9: Quarterly revenue trend: sustained recovery in Q4
Quarterly revenue trend: sustained recovery in Q4 Organic revenue growth (yoy%) 1Q20 2Q20 3Q20 4Q20 5% (6)% (5)% (2)% (13)% (6)% (10)% (9)% (21)% (48)% (54)% (51)% Apr (76)% May (59)% Jun (18)% Group Distribution Retail Full year 2020 results – 25th February 2021 9
Slide 10: Second-half: key metrics
Second-half: key metrics Topline Margin Cash Revenue Gross margin Free Cash Flow £3.8bn Stable £182m (9)% (60)bps £266m (2019: £103m) Organic sales growth Operating margin Net cash1 1: Excluding lease liabilities Full year 2020 results – 25th February 2021 10
Slide 11: Distribution
Distribution FY 2020 Revenue Operating profit Supported by geographic (21)% CCR (310)bps diversification 4,917 6.8% OSG% 994 333 Encouraging trends in 3,820 (23)% second-half 65 797 (24)% 1,330 42 3.7% 1,120 (17)% 58 1,071 140 876 (17)% 34 169 25 1 1,523 1,027 (32)% 79 2019 2020 2019 2020 Americas &
Slide 12: Retail
Retail FY 2020 Revenue Operating profit UK and Russia bounced (30)% CCR back as lockdowns eased 4,463 272 159 OSG% Significant disposals reduced our Retail 3,018 (14)% exposure 9 0bps 4,032 0.9% 3,009 (15)% 0.9% 40 9 26 0 32 25 (1) 2019 2020 2019 2020 UK & Europe Australasia Asia All figures rounded
Slide 13: Cost-restructuring: leaner and stronger
Cost-restructuring: leaner and stronger Our cost-plan: response to Covid-19 What we’ve delivered Quick and decisive global response Swift regional implementation Reduced headcount, third-party £90m of overhead savings spend and footprint rationalisation (vs 2019-PF) Creating a leaner organisation, 5
Slide 14: Income statement
Income statement FY £m 2019 2020 (unless otherwise stated) Operating profit 373 166 (pre exceptionals) Interest costs fell as we carried less inventory and interest rates Net interest & JVs (47) (37) were lower PBT 326 129 Exceptional items: majority (pre exceptionals) related to impairment of goodw
Slide 15: Continued high cash generation
Continued high cash generation Net cash bridge (£’m) 2020 Free-cash flow = £177m (£213m in 2019) 23 62 40 37 0 70 166 41 32 22 107% FCF conversion 266 103 Net Cash Operating D&A net of Working Pension/ NCI/ Net interest Net capex Net M&A Dividends Share FX / Other Net Cash @ Dec-19 profit leases cap
Slide 16: Capital allocation: maintaining our discipline
Capital allocation: maintaining our discipline 01 02 Invest in the business Dividends Capex for organic growth and Policy: 40% annual payout of technological investment basic EPS (pre exceptionals) Retain focus on portfolio optimisation Strong balance sheet Net debt to EBITDA 04 of max 1x (pre IFRS1
Slide 17: Navigating Covid in 2021: regional perspectives
Navigating Covid in 2021: regional perspectives Key markets 1Q20 2Q20 3Q20 4Q20 1Q21 Australia Asia Asia-Pac HK: closed border with China a major factor Hong Kong SG: trough reached in 2020, earlier than expected Singapore Belgium Australasia Greece Encouraging start; impacted by recent lockdowns Eu
Slide 18: Strategic Priorities
Duncan Tait Strategic Priorities
Slide 19: Strategic review - context
Strategic review - context Comments from Q3 Actions underway “ Good business, with great people and genuinely exciting prospects Accelerated digital agenda Opportunities to build on Engaged with new OEMs foundations laid Accelerate our growth in distribution ” Laser focus on execution Full year 2020
Slide 20: The process we've undertaken
The process we’ve undertaken Discovery Reflection Development OEMs Megatrends Suppliers Dealers Defined purpose Established gaps Experts Consumers Analysts Colleagues Shareholders OEM ambitions Decided direction Full year 2020 results – 25th February 2021 20
Slide 21: Global mega-trends and our business
Global mega-trends and our business Shifting Demographics Climate change & Technological Urbanisation economic power & social change resource scarcity breakthrough Emerging Markets specialist Higher motorisation Responsible business Data & digital Full year 2020 results – 25th February 2021 21
Slide 22: Embracing the changes to our industry
Embracing the changes to our industry Consumer Expectations Our Changing Industry New Growth Opportunities Distributor Global Non-auto Consumer Disruptive & dealer OEM operating Evolving retail trends intelligence players economics ambitions CASE trends model profit pools Full year 2020 results – 25
Slide 23: Opportunities for an ambitious Inchcape
Opportunities for an ambitious Inchcape Why our OEM partners need us? Inchcape key market TIVs vs Typical ‘retail market’ TIV1 22m 17m Non-INCH market 4.7m - Distribution is our specialism INCH retail market INCH distribution market - We are more nimble, faster and efficient 2.3m 1.7m - Majority of
Slide 24: The market remains highly fragmented
The market remains highly fragmented Our markets in context of the global auto distribution opportunity c17m units p.a Region 2019 TIV 2021-25 (CAGR%) APAC 5m 4% Potential new markets Europe 6m 3% 1% Africa & Middle East 4m 7% Americas 2m 7% Global 90m 3% INCH volumes INCH distribution markets Typic
Slide 25: Capturing the vehicle lifecycle opportunity
Capturing the vehicle lifecycle opportunity Initial user (0-4 years) Subsequent users (4+ years) Vehicle lifetime value1 Revenue 60% 40% Profit 50% 50% Currently underserved 1: analysis predicated on the first 12 years of an average vehicle’s life, and assumes three different owners during that peri
Slide 26: Strategic priorities: distribution is our beating heart
Strategic priorities: distribution is our beating heart Distribution Excellence Vehicle Lifecycle Services People, Culture & Capabilities Digital, Data & Analytics Efficient Scale Operations Full year 2020 results – 25th February 2021 26
Slide 27: Distribution Excellence
Distribution Excellence Becoming the undisputed number one choice for OEMs Customer Lifetime Value Accelerate New vehicle import Customer omni-channel retention Customer acquisition Globalise distribution processes Our six core distribution activities Digitalise processes Full year 2020 results – 25
Slide 28: Vehicle Lifecycle Services
Vehicle Lifecycle Services Simply capturing more value Vehicle Lifecycle Value Expand New vehicle import services & activities 1st sale % Leverage 2nd sale existing infrastructure % Build-on 3rd sale % relationships % Finance & Insurance Aftersales Trade-in Full year 2020 results – 25th February 202
Slide 29: Digital, Data & Analytics
Digital, Data & Analytics Accelerating our transformation Today Tomorrow Omni-channel Covid-19 Introduce omni- Add stock, used cars Digital platform live in all Subaru markets accelerated shift to digital, globally channel for more OEMs and aftersales into omni-channel Global S&OP process Launched r
Slide 30: Looking ahead
Duncan Tait Looking ahead \
Slide 31: Outlook
Outlook Near-term Strategic-focus - Encouraging bounce-back as restrictions eased - Distribution at our core; becoming the number 1 - Covid-19 situation remains dynamic - Greater use of technology across our business - Group supported by geographical diversification - Further building our OEM relati
Slide 32: Investment proposition: growth and cash returns
Investment proposition: growth and cash returns Disciplined capital allocation Strong cash- conversion Leveraging our Past five years: distribution scale Expansion opportunities FCF = 60-70% of - Dividends: £420m GDP+ organic operating profit Global sharing of - Acquisitions: £600m growth best pract
Slide 33: Q&A
“Bringing Mobility to the world’s communities - for today, for tomorrow and for the better” Q&A
Slide 34: Appendix
— Appendix
Slide 35: Pro-forma financials (2019)
Pro-forma financials (2019) Portfolio changes + impact of latest-FX Revenue £0.9bn £0.4bn £9.4bn £8.5bn £8.2bn 2019A 2019 & 2020 2019-PF FX 2019-PF disposals + M&A @ latest FX Operating profit £373m £(5)m £368m £(26)m1 £342m 1: c£10m of the translational currency headwind occurred during the course
Slide 36: Segmental restatements
Segmental restatements Old New AS REPORTED REVISED DISCLOSURE Distribution Retail Group Distribution Retail Group 1H19 FY19 1H19 FY19 1H19 FY19 1H19 FY19 1H19 FY19 1H19 FY19 Revenue Revenue Asia 865.8 1,681.9 865.8 1,681.9 Asia 784.1 1,522.5 81.7 159.4 865.8 1,681.9 Australasia 500.5 1,036.3 185.1 3
Slide 37: Our distribution business model (today)
Our distribution business model (today) Sales & Marketing Logistics Network Management Retailing Aftersales 1 2 4 3 5 5 6 9 7 9 8 9 National Network Aftersales and marketing 6 servicing management 4 Brand positioning 8 2 5 7 1 3 Product planning 9 Imports & logistics Parts New & Used distribution ve