Inchcape Plc · LSE:INCH
Inchcape — H1 2024 Earnings Presentation
26 slides from Inchcape's earnings presentation, Jul 30, 2024
Slide 1: H1 2024 Results
@ Inchcape cre H1 2024 == $= RESULTS — — ————— 30 July 2024
Slide 2: Agenda
Agenda OVERVIEW: Duncan Tait, Group CEO H1 2024 FINANCIALS: Adrian Lewis, Group CFO STRATEGIC PROGRESS AND OUTLOOK: Duncan Tait, Group CEO 2
Slide 3: Overview
OVERVIEW DUNCAN TAIT GROUP CEO 3
Slide 4: Continued operational and strategic delivery
Continued operational and strategic delivery Reflecting our diversified and scaled growth portfolio Inchcape becomes pureplay Resilient performance, Inchcape remains well Automotive Distributor strong balance sheet positioned for growth ▪ Divestment of UK Retail business 4% Organic revenue growth ▪
Slide 5: The transformation of Inchcape
The transformation of Inchcape A pureplay automotive Distributor delivering against KPIs Number of Number of Annualised Distribution Distribution Distribution Distribution Volumes OEM Partners 60 Markets Revenues £9.1bn 350k 39 23 150k 20 £3.3bn 2016 2023 2016 2023 2016 2023 2016 2023 Distribution i
Slide 6: Macro context for Inchcape's regions
Macro context - for Inchcape’s regions Mixed market trends, positive growth outlook Americas Europe & Africa APAC Americas ▪ Industry volumes at historic lows with key markets stabilising ▪ Structural growth prospects over the medium to long term Europe and Africa ▪ Some improvement in order intake
Slide 7: H1 2024 Financials
H1 2024 FINANCIALS ADRIAN LEWIS GROUP CFO 7
Slide 8: H1 2024: a resilient performance
H1 2024: a resilient performance Topline: Profitability: Balance sheet, Shareholders: Revenue Operating margin cash flow and ROCE: Basic EPS Free Cash Flow £4.7bn 6.3% £226m 34.7p (10) bps from H1 2023 in with 76% FCF conversion (3)% from H1 2023 constant currency +8% +4% £226m £524m 28% 11.3p +7% f
Slide 9: Group revenue bridge
Group revenue bridge Driven by solid organic growth and acquisition contribution Europe Americas & Africa (9)% 18% M&A 4% H124 FX (4)% £4.9bn Constant H124 currency £4.7bn Reported APAC 9% 4% Group organic growth H123 £4.6bn 8% Reported Constant currency growth Where appropriate, figures stated befo
Slide 10: Group adjusted operating margin bridge
Group adjusted operating margin bridge Resilience through operating leverage H123 Gross 6.5% Margins ▪ Regional mix (20) Currency/Mix bps ▪ Some pricing pressure in the Overhead Americas leverage (10) bps H124 ▪ Operating leverage 6.3% ▪ Strong cost management ▪ Derco synergies (50)bps 40bps Where a
Slide 11: APAC: Further growth and margin accretion
APAC: Further growth and margin accretion Revenue £m Operating profit £m 1,571 1,495 1,255 143 1 116 86 H1 2023 H2 2023 H1 2024 32% Organic growth % 39% H1 2023 H2 2023 H1 2024 of Group of Group adjusted Revenue operating profit Adjusted operating margin % +15% +18% +9% 6.9% 9.1%1 7.8% Total growth
Slide 12: Europe & Africa: Continued outperformance
Europe & Africa: Continued outperformance Revenue £m Operating profit £m 1,397 1,413 1,622 70 65 85 34% H1 2023 H2 2023 H1 2024 28% H1 2023 H2 2023 H1 2024 of Group of Group adjusted Revenue operating profit Organic growth % Adjusted operating margin % +20% +22% +18% 5.0% 4.6% 5.2% H1 2024 revenue:
Slide 13: Americas: Resilient market share, despite lower industry volumes
Americas: Resilient market share, despite lower industry volumes Revenue £m Operating profit £m 1,911 1,835 1,608 139 117 98 34% H1 2023 H2 2023 H1 2024 33% H1 2023 H2 2023 H1 2024 of Group of Group adjusted Revenue operating profit Organic growth % Adjusted operating margin % +16% +3% (9)% 7.3% 6.4
Slide 14: Income statement
Income statement £m (unless otherwise stated) H1 2023 H1 2024 Adjusting items include acquisition & integration costs and net Revenue 4,563 4,725 monetary loss on hyperinflation Adjusted Operating Profit 295 299 Underlying tax rate higher at Share of profit after tax from 32.7%, but expected to redu
Slide 15: Net Finance Costs
Net Finance Costs Further alignment of supplier terms at acquired businesses £73m £81m £74m H1 2024 commentary and outlook: £38m ▪ Reduction in average debt, offsetting short term cash-funded £34m inventory flows Net Interest: £39m ▪ Further moderation, due to deleveraging £10m £9m ▪ Increasing with
Slide 16: Improved net debt and leverage position
Improved net debt and leverage position Supported by strong Free Cash Flow performance Net Cash / (Debt) bridge (£m) H1 2024 highlights: ▪ FCF of £226m, FCF conversion of c.76% 1H24 Free cash flow £226m ▪ Supported by strong working capital management ▪ Net debt of £524m ▪ Leverage of 0.7x 76% OP/FC
Slide 17: Capital allocation policy
Capital allocation policy A disciplined approach 01: 02: 03: 04: Invest in the business Dividends Value accretive M&A Share buybacks Capex for organic growth Policy: 40% annual payout Healthy pipeline of Viability to continue to be and technological of basic adjusted EPS bolt-on acquisitions assesse
Slide 18: Strategic Progress and Outlook
STRATEGIC PROGRESS AND OUTLOOK DUNCAN TAIT 18
Slide 19: Our diversified and scaled OEM portfolio
Our diversified and scaled OEM portfolio The foundation for our business Europe Japan China USA Selected OEM brands that Inchcape distributes passenger and commercial vehicles. Categorisation based on HQ origin. 19
Slide 20: Strategic momentum maintained in H1 2024
Strategic momentum maintained in H1 2024 Continued progress on Distribution contracts Good progress on recent OEM contracts won, H1 2024 Related market contract wins – examples: Estonia Great Wall BYD Indonesia Belgium TIV (passenger vehicles) – c.25k Initial roll-out, Robust growth in supported by
Slide 21: Differentiating through our technology
Differentiating through our technology Global capabilities, delivered locally Digital eXperience Data Analytics Our global tech capability Platform Platform + Omni-channel platform AI models tailored to Inchcape Digital Digital Delivery for selling vehicles and each OEM and market Architecture: Cent
Slide 22: H1 2024 - continued operational & strategic progress
H1 2024 - continued operational & strategic progress Inchcape well positioned for future growth Contract wins and Strategic focus as acquisitions pureplay Distributor FY 2024 Medium to long term ▪ Further Distribution ▪ Driving market share ▪ Moderated growth, ▪ Return to higher levels contract wins
Slide 23: Q&A
Q&A
Slide 24: H1 2024 results
H1 2024 results Summary A resilient financial performance, with a strong balance sheet The Group remains well positioned for future growth Inchcape becomes a pureplay automotive Distributor 24
Slide 25: Appendix
APPENDIX
Slide 26: Continued operations restatement
Continued operations restatement Income statement and Balance Sheet Income statement UK Balance sheet OLD NEW AS REPORTED REVISED DISCLOSURE Revenue 1H23 2H23 FY23 Revenue 1H23 2H23 FY23 As at 30 June 2024 APAC 1,255 1,571 2,826 APAC 1,255 1,571 2,826 Intangible assets 2 Europe & Africa 1,259 1,262