(Alliance News) - Inchcape PLC on Thursday reported a 3.3% decrease in profit for the first half of 2019, but said it expects to deliver an improvement in the second half.
The stock was trading 3.8% lower on Thursday in London at 586.00 pence a share.
The car dealer reported a decline in pretax profit for the six months to the end of June to GBP153.7 million from GBP158.9 million a year ago, as net operating expenses grew to GBP464.0 million from GBP443.4 million.
Meanwhile, Inchcape's revenue in the first half rose 2.4% to GBP4.73 billion from GBP4.61 billion year-on-year. On a constant currency basis, revenue climbed by 2.7%.
Geographically, Asia was supported by market share gains and a supportive commercial vehicle market in Singapore, as well as good growth in some of the smaller Asia markets.
Inchcape said its European business benefited from growth in the Balkans and Baltics, while Russia drove emerging markets growth.
Together revenue growth in each of these regional segments was offset by a meaningful decline in Australasia, the company noted, given anticipated Subaru supply constraints in the market over January to April.
Inchcape is paying a 8.9p per share dividend for the first half, unchanged year-on-year.
"Whilst trading in the first half of 2019 was challenging, as we had anticipated, we are today reiterating our resilient outlook for the full-year excluding a transactional yen headwind," said Chief Executive Stefan Bomhard.
"We have now launched the next phase of our plans to improve the span of performance across our UK business, and as a part of this we announce the sale of seven retail sites, which in aggregate were loss-making in 2018, for GBP21 million cash proceeds," added Bomhard.
Inchcape said these Volkswagen and Audi sites in total were loss-making in 2018 and the valuation reflects book value of the assets. The disposals will complete in the second half with the corresponding cash received at this time.
Looking ahead, the company said its performance in the year-to-date has been in line with expectations. Inchcape's expectation of an improved second-half performance is underpinned by the normalisation in Australasia supply seen towards the end of the first half, it explained.
The FTSE 250-listed company said it is confident of a continued broadly flat year-on-year performance in its UK Retail business and improved Australia Retail profitability compared to 2018.
Inchcape (INCH)