Inchcape Plc · LSE:INCH
Inchcape — Deutsche Bank Store Tour 2015
30 slides from Inchcape's conference presentation, Jan 22, 2015
Slide 1: Premium Growth, Premium Returns – Deutsche Bank Store Tour 2015
PREMIUM GROWTH, PREMIUM RETURNS DEUTSCHE BANK STORE TOUR 2015 22 JANUARY 2015
Slide 2: Agenda
Agenda Strong growth momentum in 2014 Our Competitive Advantages Sustaining the Growth Momentum with Industry and Local Drivers Q&A 2
Slide 3: Sustainable revenue and profit growth
Sustainable revenue and profit growth Revenue PBT 4 year CAGR +4.0% 350 4 year CAGR +15.4% 7.0 6.8 6,643 6,525 299 6.6 300 275 6.4 £m % 247 6.2 6,085 250 228 6.0 5,885 214 5,826 5.8 200 5,584 5.6 155 5.4 150 5.2 5.0 100 2009 2010 2011 2012 2013 2014E 2009 2010 2011 2012 2013 2014E 2014E – consensus
Slide 4: Sustainable revenue and margin growth
Sustainable revenue and margin growth Revenue Operating Margin 7.0 5.0% 4.7% 6.8 6,643 6,525 4.5% 4.4% 6.6 4.2% 4.3% 6.4 4.0% 3.8% 6.2 6,085 £m % 6.0 5,885 3.5% 5,826 3.1% 5.8 5,584 3.0% 5.6 5.4 2.5% 5.2 5.0 2.0% 2009 2010 2011 2012 2013 2014E 2009 2010 2011 2012 2013 2014E 2014E – consensus data as
Slide 5: Strong FCF and disciplined capital allocation
Strong FCF and disciplined capital allocation Free Cash Flow ROCE 24 23 300 22 22 22 22 21 250 225 202 20 193 200 £m % 18 150 16 98 94 14 100 71 14 50 12 0 10 2009 2010 2011 2012 2013 2014E 2009 2010 2011 2012 2013 2014E 2014E – consensus data as of 20 Jan 2015 Nothing on this slide constitutes a pr
Slide 6: Sustainable profit growth
Sustainable profit growth EPS 2009 – 2014E 50 49.3 45 43.5 39.1 40 p 35.5 35 32.0 30 27.1 25 2009 2010 2011 2012 2013 2014E 2014E – consensus data as of 20 Jan 2015, basic adjusted (pre exceptional items) EPS Nothing on this slide constitutes a profit forecast 6
Slide 7: Our Competitive Advantages
® Inchcape OUR COMPETIIVE ADVANTAGES
Slide 8: Positioned to perform in a growth Industry
Positioned to perform in a growth Industry New Car Volume Car Parc 1-5 yrs • 21 Markets 4.3% APAC / 3.5% 3.7% • 52% of Revenue Emerging • 72% of Trading Profit APAC / markets Emerging • 6.6% Trading Margin 1.2% CAGR: markets 2010-14 2014-19 New Car Volume Car Parc 1-5 yrs • 5 Markets 3.3% UK / • 48%
Slide 9: Our Go To Market strategy
Our Go To Market strategy DISTRIBUTION RETAIL ONLY TRADING PROFIT TRADING PROFIT APAC & EMERGING 81% 19% MARKETS 72% 71% 1% UK AND EUROPE 28% 10% 18% Strong in small markets with Distribution …and selective in large markets with Retail Trading profit data H1 2014 9
Slide 10: Portfolio of the world's premium automotive brands
Portfolio of the world’s premium automotive brands Six core relationships deliver c90% of profit Strong R&D Premium capability to brands’ lead power- pricing power train and deliver segment superior innovation margins Premium brands deliver strong pricing power 10
Slide 11: Our partners are investing in R&D ahead of the industry
Our partners are investing in R&D ahead of the industry R&D as % of sales (2013) Inchcape’s partners 5.1% Since 2010 Inchcape’s brand Other brands 4.2% partners have increased annual R&D spending by 2010 – 2013 sales CAGR 66% vs. the total Inchcape’s partners 11.7% industry at 39% Other brands 5.9%
Slide 12: Diversity of profit streams
Diversity of profit streams New Finance Vehicle Distribution & Insurance New Car Value Drivers Products & Retail c40% of gross profit Parts Used Distribution Aftersales Service Vehicles Car Parc Value Drivers & Retail Retail c60% of gross profit Customer service advantage delivering strong margins 1
Slide 13: 1-5 year UK Car Parc growth fuelling Aftersales
1-5 year UK Car Parc growth fuelling Aftersales New Car growth feeding into the UK Car Parc* +15% 13.5 13.2 12.8 12.7 13.0 12.3 12.5 12.1 11.8 12.0 m 11.4 11.5 11.5 11.0 10.5 10.0 2009 2010 2011 2012 2013 2014 2015E 2016E Source: IHS Automotive, 1-5 year Car Parc 13
Slide 14: Customer 1st Strategy Differentiation
Customer 1st Strategy Differentiation STRENGTHEN Creating an EXPAND Superior customer incredible Selective investment customer value proposition experience for in high margin / high through Inchcape the best car growth areas brands in the Advantage world 14
Slide 15: Operational discipline on Top Five Priorities
Operational discipline on Top Five Priorities Customer 1st strategy to create differentiation Commercial initiatives Growing to grow revenues Balanced focus Growing market aftersales ahead of competitors between share commercial and Cash initiatives cash initiatives Controlling Selective Improving t
Slide 16: Customer service tracked consistently and globally
Customer service tracked consistently and globally Customer Service – NPS* 140 127 130 17,000 surveys every month 120 across our 26 110 markets. Covering 100 Vehicles and 100 Aftersales 90 80 2009 2014 * Rebased Inchcape data 16
Slide 17: Market share strength across the Group
Market share strength across the Group margin Growing marke t Improving share Growing aftersales Controlling working capital Selective capital expenditure Singapore Market leader Hong Kong Market leader Brunei Market leader Macau Top 3 Strategic and Guam Market leader economic Saipan Market leader a
Slide 18: Marketing: driving share
Marketing: driving share margin Growing marke t Improving share Growing aftersales Controlling working capital Selective capital expenditure Clear positioning for Land Rover Capturing the Subaru USP in Hong Kong in Australia The real thing. 18
Slide 19: Increasing retention & Car Parc growth
Increasing retention & Car Parc growth Aftersales retention gains in Our BMW Chile Car Parc has grown Singapore since 2008 145% in the past 4 years 140 18,000 120 14,000 100 k 10,000 80 6,000 60 2008 2014 2,000 Years 1 to 6 Retent ion % (Rebased) 2010 2014 19
Slide 20: Disciplined cost base management
Disciplined cost base management margin Growing market Improv ing share Growing aftersales Controlling working capital Selective capital expenditure 2008-2013 costs reduction: £154m Continuous productivity focus Overheads / Revenue 30 78 10.0% £m % 9.8% (154) 9.7% 686 640 2008 Adj* Inflation Non LFL
Slide 21: Sustaining the Growth Momentum
SUSTAINING THE GROWTH MOMENTUM
Slide 22: Positioned to perform in a growth Industry
Positioned to perform in a growth Industry New Car Volume Car Parc 1-5 yrs • 21 Markets 4.3% APAC / 3.5% 3.7% • 52% of Revenue Emerging • 72% of Trading Profit APAC / markets Emerging • 6.6% Trading Margin 1.2% CAGR: markets 2010-14 2014-19 New Car Volume Car Parc 1-5 yrs • 5 Markets 3.3% UK / • 48%
Slide 23: Unique local growth drivers
Unique local growth drivers UK: Personal contract purchase (PCP) shortening the replacement cycle, coupled with supportive macro Strong end Australia: SUV growth leveraged by Subaru and market demand benefiting from Yen sourcing Singapore: COE cycle driving the New car market Hong Kong: Commercial v
Slide 24: UK: PCP is a powerful force for growth
UK: PCP is a powerful force for growth UK financing strong through the cycle 2.5 6.0 2.3 5.0 UK Drivers: 4.0 Pent up demand 2.1 3.0 PCP 1.9 2.0 FX (Imports) 1.7 1.0 OEM UK focus within Europe 1.5 0.0 Population growth 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 UK New Car Sales (m) (LHS) UK Av
Slide 25: UK: PCP is a powerful force for growth
UK: PCP is a powerful force for growth 2m units potential from pent up demand 2.5 UK Drivers: 2.3 Pent up demand 2.1 PCP 1.9 FX (Imports) 1.7 OEM UK focus within Europe 1.5 Population growth 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 UK New Car Sales (m) Difference to 2007 (m) Source: SMMT 25
Slide 26: Australia: Well positioned in a growth market
Australia: Well positioned in a growth market Increasing SUV market penetration 35.0% 30.0% Australia Drivers: SUV Growth (Subaru) 25.0% Yen Sourcing 20.0% Premiumisation of demand Population growth 15.0% 2010 2011 2012 2013 2014 Source: VFACTS 26
Slide 27: Singapore: COE cycle driven growth
Singapore: COE cycle driven growth New car market recovery 140 120 2015E 100 New car market +50% 80 k 60 40 20 0 2007 2008 2009 2010 2011 2012 2013 2014 2015E Source: LTA, Inchcape estimate 27
Slide 28: Hong Kong: Commercial vehicle scrappage scheme
Hong Kong: Commercial vehicle scrappage scheme 82k vehicles to be phased out over 5 years 35.0 Euro III 30.0 Inchcape Hong Kong 25.0 Euro II CV market share 20.0 Pre-Euro k c40% Euro I 15.0 10.0 5.0 0.0 Phase Out 31.12.2015 31.12.2016 31.123.2017 31.12.2019 Date Source: HK EPD 28
Slide 29: Greece: the start of a replacement cycle
Greece: the start of a replacement cycle 2015 New car forecast +20% 29
Slide 30: Agenda
Agenda Strong growth momentum in 2014 Our Competitive Advantages Sustaining the Growth Momentum with Industry and Local Drivers Q&A 30