Inchcape Plc · LSE:INCH
Inchcape — FY2021 Earnings Presentation
31 slides from Inchcape's earnings presentation, Feb 24, 2022
Slide 1: FY 2021 Results
FY 2021 RESULTS 24th February 2022
Slide 2: Duncan Tait, Group CEO
@ Inchcape DUNCAN TAIT GROUP CEO
Slide 3: Agenda
Inchcape 3 Agenda Strategic progress Overview of FY21 FY21 financial details & Outlook
Slide 4: 2021 highlights
Inchcape 4 2021 highlights Strong execution; positive Launched new strategy Continued to shift our growth across all regions Accelerate; focused on two portfolio towards distribution huge growth opportunities: 5 distribution acquisitions; Supply constraints further retail disposals supported vehicle
Slide 5: 2021 headline KPIs
Inchcape 5 2021 headline KPIs Topline Profitability Cash Shareholders Revenue Operating margin Free Cash Flow Underlying EPS £7.6bn 4.3% (2019: 4.0%) £289m 56.2p +21% £296m 88% 22.5p Organic growth (YoY%) PBT % FCF conversion DPS (proposed) Figures are stated pre-exceptionals
Slide 6: Gijsbert de Zoeten, Group CFO
@ Inchcape GIJSBERT DE ZOETEN GROUP CFO
Slide 7: 2021 results: solid business momentum
Inchcape 7 2021 results: solid business momentum 2021 2020 2019 FY H2 H1 FY H2 H1 FY Revenue £7.6bn £3.7bn £3.9bn £6.8bn £3.8bn £3.0bn £9.4bn Organic growth (YoY%) +21% +8% +37% Operating margin % 4.3% 4.6% 4.1% 2.4% 3.6% 0.9% 4.0% PBT £296m £153m £143m £128m £119m £9m £326m PBT (comparable basis1)
Slide 8: Group revenue recovering towards 2019 levels
Inchcape 8 Group revenue recovering towards 2019 levels Revenue bridge (2021 vs 2019) £0.3bn £9.4bn £1.4bn £7.8bn £7.6bn £0.5bn £0.2bn (3)% underlying performance 2019 Acquisitions: Disposals: Currency 2019 Organic 2021 Reported Distribution Retail Comparable Reported
Slide 9: Revenue trend: Q4 slowdown due to supply shortages
Inchcape 9 Revenue trend: Q4 slowdown due to supply shortages Organic revenue growth versus 2019 1H21 3Q21 4Q21 2% 5% (6)% (5)% (7)% (2)% (2)% (3)% (5)% Group Distribution Retail
Slide 10: Distribution: 2021 regional revenue trends
Inchcape 10 Distribution: 2021 regional revenue trends Europe: £1.5bn ORG%: +25% Strong model line-up supported market shares Asia Back above 2019 levels Australasia Asia: £1.1bn Europe ORG%: +11% All markets delivered Americas & Africa positive growth Singapore and Hong Kong expectedly below 2019 A
Slide 11: Distribution: profit recovering across all regions
Inchcape 11 Distribution: profit recovering across all regions Revenue Operating profit1 (£m) Encouraging topline performance 6.8% £4.9bn ORG% £4.7bn 333 Profitability supported by +22% 5.3% cost-restructuring 65 £3.8bn 246 42 Added £200m of distribution revenue via 77 58 3.7% M&A and contract-wins
Slide 12: Retail: strong performance amid supply constraints
Inchcape 12 Retail: strong performance amid supply constraints Revenue Operating profit1 (£m) Performance supported by robust vehicle pricing £4.5bn 4,500 UK and Russia businesses 4,000 at peak profitability 100 2.8% 3,500 £3.0bn £3.0bn 82 3,000 80 2021 result includes c.£10m of profit from St. Pete
Slide 13: Income statement
Inchcape 13 Income statement FY £m 2021 20201 2019 (unless otherwise stated) Operating profit 328 164 373 (pre exceptionals) Interest costs fell as we carried less inventory and interest rates Net interest (32) (37) (47) were lower PBT 296 128 326 Exceptional items: loss on disposal (pre exceptional
Slide 14: Continued excellent cash generation
Inchcape 14 Continued excellent cash generation Net cash bridge (£m) 2021 Free-cash flow = £289m £177m in 2020 44 30 328 73 56 40 52 81 88% FCF conversion 99 379 266 0 Net Cash Operating D&A net of Working Interest, tax & Net capex Dividends Acquisitions Share FX / Other Net Cash @ Dec-20 profit lea
Slide 15: Capital allocation policy: highly attractive and disciplined
Inchcape 15 Capital allocation policy: highly attractive and disciplined 01 Invest in the 02 Dividends 03 Value 04 Share business accretive M&A buybacks Capex for organic Policy: Disciplined Consider growth and 40% annual payout approach to appropriateness of technological of basic EPS valuation sha
Slide 16: Attractive financial characteristics and exciting prospects
Inchcape 16 Attractive financial characteristics and exciting prospects Group FCF ROCE1 conversion1,2 Net Cash 30% 88% £0.4bn high longer-term significant headroom ROCE 60-70% for acquisitions3 1: calendar year 2021 | 2: free cash flow as a proportion of operating profit| 3: c.£60m anticipated outfl
Slide 17: Strategic progress
DUNCAN TAIT STRATEGIC PROGRESS
Slide 18: Strategic framework
Inchcape 18 strategic framework Our Growth Drivers Distribution Excellence Vehicle Lifecycle Services Our Enablers Culture and Digital, Data & Efficient Scale Capabilities Analytics Operations Responsible Business
Slide 19: Considerable opportunities for an ambitious Inchcape
Inchcape 19 Considerable opportunities for an ambitious Inchcape Distribution Excellence Vehicle Lifecycle Services Annual new car volumes (units) Vehicle lifecycle value profit split2 90m 17m New market opportunities Typically insourced e.g. China, 75% Currently by OEMs US, UK underserved by Inchca
Slide 20: Inchcape: the leading automotive distributor
Inchcape 20 Inchcape: the leading automotive distributor Our competitive advantages: ▪ The global leading distributor: >40 markets across six continents ▪ Long-term relationships with strong OEM brands ▪ A plug-and-play distribution platform: unique digital and data analytics capabilities
Slide 21: Accelerated roll-out of our Digital Experience Platform
Inchcape 21 Accelerated roll-out of our Digital Experience Platform Digital Experience Platform From 1 to 27 OEM markets ▪ Ability to quickly add OEMs into markets From 1 to ▪ Providing a leading, digital-first, consumer 11 experience OEMs ▪ Leveraging our technological capabilities and investment a
Slide 22: Driving smarter, faster & better business decisions
Inchcape 22 Driving smarter, faster & better business decisions Data Analytics Platform New vehicle import Improved Operational Increased financials efficiencies conversion Customer Vehicle pricing acquisition Customer % retention Lead scoring Parts pricing % Finance & Insurance Afte
Slide 23: Leveraging our capabilities to accelerate our growth
Inchcape 23 Leveraging our capabilities to accelerate our growth 17m Marketable Sales customers conversion Non-Inchcape +30% >2x markets digital visitors opting into DXP lead to sale vs. communications other web leads Reputation score Inchcape +21% markets customer experience Inchcape survey volumes
Slide 24: Distribution deals have accelerated over the past 5 years
Inchcape 24 Distribution deals have accelerated over the past 5 years 2010 2016 2017 2018 2019 2020 2021 Today Number of 0 2 2 3 3 5 5 deals Revenue - c.£400m c.£100m c.£250m c.£150m c.£200m c.£200m added New OEMs - 1 2 2 1 0 3 New markets - 3 0 3 2 2 3
Slide 25: A number of exciting distribution deals in 2021
Inchcape 25 A number of exciting distribution deals in 2021 Existing New OEMs Revenue +c.£200m Markets Guatemala Indonesia Chile Guam (+) Barbados (+) (+): indicates the base of the core distribution operations which also serves other neighbouring islands
Slide 26: Capturing more of the lifetime value of a vehicle
Inchcape 26 Capturing more of the lifetime value of a vehicle Vehicle Lifecycle Value Three opportunities in focus Timeline New vehicle import 1. 2021/ 22 Digital first, multi-brand, Lifetime 1st sale used car platform profits % B2C 25% 2. Digital Parts Platform 2023/ 75% 2nd sale 24 Digital platfor
Slide 27: A strategic Responsible Business framework
Inchcape 27 A strategic Responsible Business framework Planet People Places Practices ▪ Mapping the risks and ▪ Prioritising safety ▪ Positively impacting ▪ Strengthening our opportunities of and wellbeing local communities governance policies, climate change ▪ Creating an inclusive and ▪ Supporting
Slide 28: Looking ahead
@ Inchcape DUNCAN TAIT LOOKING AHEAD
Slide 29: Outlook
Inchcape 29 Outlook Consumer demand Supply chain Pandemic situation Supported by is robust disruptions remains dynamic geo-diversification Performance to date: Ongoing uncertainty about Expect to make good progress 2022 outlook continuation of trends seen in 2021 the rest of the year with our strate
Slide 30: Investment case: well-positioned to deliver significant value
Inchcape 30 Investment case: well-positioned to deliver significant value Attractive Consolidation shareholder returns opportunities Margin expansion Dividend payout: 40% Strong organic growth We are the leader with c.1% Track record of share share of global distribution buybacks Leverage our global
Slide 31: Q&A
Inchcape 31 Q&A