Inchcape Plc · LSE:INCH
Inchcape — FY2007 Earnings Presentation
39 slides from Inchcape's earnings presentation, Feb 26, 2008
Slide 1: Preliminary Results
Preliminary Results 26 February 2008
Slide 2: Executing our strategy: The 6th consecutive year of record results
Executing our strategy: The 6th consecutive year of record results André Lacroix Group Chief Executive
Slide 3: Group financial highlights
Group financial highlights • Sales* up 26% to £6.1bn • Like for like sales* up 3.4% • Operating profit** up 27% to £270.7m • Like for like operating profit** increase of 6.6% • EPS*** up 3.6% to 37.0p • Final dividend up 5.0% to 10.5p; full year dividend up 5.0% to 15.75p Consistent and strong deliv
Slide 4: 2007 Operational and strategic highlights
2007 Operational and strategic highlights • Strategy delivery on track driving record profits for the Group • Strengthen: like for like sales* +3.4%; like for like operating profit* +6.6% • Expansion: Sales* from new investments £1.2bn; operating profit* from new investments £47.9m • Emerging Market
Slide 5: Financial Results
Financial Results Barbara Richmond Group Finance Director
Slide 6: Summary P&L
Summary P&L 2007 2006 Change £m £m % Sales 6,057 4,842 25.1 Operating profit* 265.0 213.9 23.9 Net interest cost 33.4 5.9 466 Profit before tax 235.1 213.9 9.9 Tax rate (%) 25.0 21.7 3.3ppt EPS (p) ** 37.0 35.7 3.6 Dividend per share (p) 15.75 15.0 5.0 Dividend cover (x) 2.3 2.4 - 6 * Before excepti
Slide 7: Sales
Sales Change % Like for like 2007 2006 Change constant change % constant £m £m % currency currency Distribution 2,509.5 2,518.5 (0.4) 1.4 0.4 Retail 3,547.3 2,323.6 52.7 52.6 6.8 Total 6,056.8 4,842.1 25.1 26.0 3.4 7
Slide 8: Trading profit & ROS
Trading profit & ROS 2007 2006 Change Change % Like for like £m £m % constant change % Trading profit currency constant currency Distribution 204.9 187.1 9.5 12.7 8.4 Retail 87.6 51.7 69.4 69.2 2.1 Total 292.5 238.8 22.5 24.9 7.0 ROS (%) 2007 2006 Change Like for like ppt change ppt Distribution 8.2
Slide 9: Regional analysis – trading profit
Regional analysis – trading profit 2007* 2006* 8% 15% 9% 16% 24% 10% 19% 10% 5% 16% 10% 25% 17% 16% Australia Emerging Markets Hong Kong UK Singapore ROW Europe** * Before central costs 9 ** Excluding UK and Emerging Markets
Slide 10: Australia
Australia* Distribution Distribution Retail Retail • Another record year £m change % £m change % • Limited growth in Distribution sales due to model run outs Sales 408.1 2.1 236.0 8.8 • Increased Distribution Like for like 408.1 2.1 222.5 2.6 sales margin due to special editions and tight cost Tradi
Slide 11: Hong Kong (VIR)
Hong Kong (VIR) • Market up 16.5% £m Change % • Government incentive increased hybrid sales Sales 264.3 17.6 • Strong sales recovery • New models and store Like for like sales 213.4 18.9 relocations Trading profit* 28.2 17.6 Like for like profit* 22.7 10.9 ROS %* 10.7 - 11 * Excluding property profi
Slide 12: Singapore (VIR)
Singapore (VIR) • New car market decline £m Change of 9.6% % • Lack of new models Sales 496.8 (24.7) • Competition from new models Like for like sales 496.0 (24.7) • Sales down 25% Trading profit 47.7 (18.6) • Market share decline of 6.3ppts to 18.2% Like for like profit 47.5 (18.5) • CV sales stron
Slide 13: Europe
Europe • Excellent performance Distribution Distribution Retail Retail across the region £m change % £m change % • Record results in Distribution Sales 824.1 5.9 379.8 (8.0) • Successful Retail Like for like sales 820.5 5.9 377.9 4.8 turnaround • Disposal of French retail Trading profit 49.3 20.0 0.
Slide 14: UK
UK • Retail LFL sales up 5.2% Distribution Distribution Retail Retail • Outperformed UK market £m change % £m change % • Focus on premium brands Sales 67.5 (31.0) 2,646.0 63.9 • Industry leading LFL ROS of 2.5% Like for like sales 36.4 (11.4) 1,509.9 5.2 • Used car margin pressure Trading profit 4.9
Slide 15: Emerging Markets
Emerging Markets • Strong growth in Distribution Distribution Retail Retail all markets £m change % £m change % • Scale investment in the Baltics Sales 240.2 80.6 280.0 251.4 • Full year of Russia producing ROS of 6.6% Like for like sales 192.8 45.0 124.9 56.6 • China ahead of Trading profit 16.3 71
Slide 16: Cash flow and net debt
Cash flow and net debt Operating cash flow £m Free cash flow £m Net cash £m Operating profit* 265.0 Operating cash flow 306.2 Free cash flow 184.7 Depreciation/ Net interest (37.1) Dividends (71.1) amortisation 33.7 Taxation (49.8) Share buyback (18.5) Working capital 14.6 Minority interest (1.8) Pe
Slide 17: 2007 summary: Delivering our strategy
2007 summary: Delivering our strategy Strengthen Expand • Focus on operational excellence and • Existing facilities renewed and additional diversified value drivers delivers results funding obtained prior to credit crunch • Record year for Europe Distribution and • Successful entry into Russia and C
Slide 18: Executing our strategy: 2008 Priorities
Executing our strategy: 2008 Priorities André Lacroix Group Chief Executive
Slide 19: Track record of profitable growth
Track record of profitable growth SALES HPBT 7 250 6 200 5 150 4 £BN £M 3 100 2 50 1 0 0 2001 2002 2003 2004 2005 2006 2007 2001 2002 2003 2004 2005 2006 2007 CAGR: 11.7% CAGR: 26.9% 19
Slide 20: Robust business model
Robust business model Broad geographic spread Multiple brand relationships Wgt avg. market growth 07: 4% Strongest premium brands Scale and high margin operations Long-term and scale relationships Big upside in Emerging Markets Right brands, right markets Wgt avg. GDP growth 08: 2.9% 26 countries Gr
Slide 21: Delivering the strategy: 2008 priorities
Delivering the strategy: 2008 priorities Strengthen Expand • Drive LFL vehicles growth ahead • Integrate acquisitions made in of the market to gain share 2007 and deliver synergies • Accelerate growth of highly profitable Aftersales • Footprint expansion in Russia • Drive margin improvement in • Foo
Slide 22: Delivering our strategy: 2008 Strengthen
Delivering our strategy: 2008 Strengthen Priorities Initiatives Drive LFL vehicles growth ahead of the market • New models and limited editions to gain share • Effective marketing to drive traffic • Continue to improve Customer experience • Improve conversion rate from footfall Accelerate growth of
Slide 23: Australia: New model launches
Australia: New model launches • Stable economic outlook - 2007 market at record levels (>1m new cars) and expected to remain strong in 2008 • New product launches to drive sales - 64% Subaru line-up new in 2008: • Impreza launched Q4 2007 • Tribeca face lift in January 2008 • Forester to launch Marc
Slide 24: Hong Kong: Strengthen our leadership position
Hong Kong: Strengthen our leadership position • Strong market momentum to continue with 7-10% growth expected in 2008 • Excellent pipeline of new products: • MPV segment : Alphard, Noah 7-seater, new Mazda5, new Mazda8 • Sedan : new Corolla from Toyota (end 07), new Mazda6 • Luxury : Lexus GS450H an
Slide 25: Singapore: Maintain market leadership and defend margins
Singapore: Maintain market leadership and defend margins • Market expected to decline by 15-20% in 2008 • Strong new product pipeline: • Replacement of our #1 ageing model in Q2 with the new Corolla Altis • Enter the fast growing MPV segment with the launch of the Wish • Strengthen our position in t
Slide 26: Europe: Sustaining momentum in 2008
Europe : Sustaining momentum in 2008 Distribution • European markets expected to grow moderately • Continued focus on market share and parts growth • Excellent momentum in Greece • Belgium motor show year • Mazda6 launch in Finland Retail • Strong team established in the last two years • Continuous
Slide 27: UK: Continued focus on premium brands
UK: Continued focus on premium brands • Premium partners expected to outperform the market, driven by new vehicle launches • January market down 2.1% in aggregate but core premium partners were up 5.7% • SMMT new car registrations forecast to decline by 2.5% in 2008 • OEMs continue to provide consum
Slide 28: UK: well placed to outperform the market in 2008
UK: well placed to outperform the market in 2008 Competitive Advantages 2008 Initiatives Revenue Growth • Scale relationships with premium • New Products brand partners • Audi: Q5, A4, A3 Cab • Stable & experienced franchise • BMW: X6, 1 Series Cab, 7 Series management structure • Honda: Accord, Jaz
Slide 29: Delivering our strategy: 2008 Expand
Delivering our strategy: 2008 Expand Priorities Initiatives Integrate acquisitions made in 2007 and • Further synergies from UK acquisitions deliver synergies • Latvia and Lithuania integration benefits • St Petersburg multi-brand scale benefits Footprint expansion in Russia • Toyota St Petersburg s
Slide 30: Emerging Markets delivering strong revenue growth
Emerging Markets delivering strong revenue growth • 2007 revenue increased 144% to £519m • 13 sites under development : 5 relocations and 8 greenfield • Targeting 50% increase in revenue in 2008 Inchcape Retail Centres in Emerging markets Emerging markets revenue 40 1,200 35 39 37 1,000 30 31 +50% 8
Slide 31: Strong fundamentals in Emerging Markets provide significant further growth
Strong fundamentals in Emerging Markets provide significant further growth • Emerging Markets continue to grow at a rapid rate: • Inchcape Markets forecast to grow 20%* in 2008 • CAGR of 15% to 2011* • Significant OEM investments leading to strong network expansion opportunities • Sustainable margin
Slide 32: Confident outlook for 2008 and beyond
Confident outlook for 2008 and beyond • Robust business model: excellent portfolio diversification • Long term and scale relationships with OEMs • Strong and stable management team • Continued progress in developed markets • Further expansion in high growth, higher margin Emerging Markets • Signific
Slide 33: Inchcape
® Inchcape
Slide 34: Appendices
® Inchcape Appendices
Slide 35: Like-for-like definition
Like-for-like definition • Following are excluded from like-for-like sales: • Businesses that are acquired, from the date of acquisition until the 13th month of ownership • Businesses that are sold or closed • Retail centres that are relocated from the date of opening until the 13th month of trading
Slide 36: Emerging markets definition
Emerging markets definition • Emerging markets are those markets in which the Group operates and where total new vehicle volume sales by international brands are growing by 10% or above per annum • This currently covers the following countries: • The Balkans • The Baltics • China • Poland • Russia 3
Slide 37: Impact of currency on pre-tax profit
Impact of currency on pre-tax profit 2007actual 2007constant Currency £m exchange rates currency impact Hong Kong 28.3 31.0 (2.7) Singapore 46.0 47.7 (1.7) Australia 43.8 42.9 0.9 Other 54.7 57.0 (2.3) Trading profits (5.8) Interest/JV & Assoc PAT (0.5) Pre-tax profit (6.3) 37
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