The group said profit before goodwill amortisation and exceptional items is expected to be slightly higher than industry predictions of £165.5m, which itself is some 21.9% above the equivalent figure for 2003.
In the UK (14.8% of operating profit in the financial year to December 31, 2003) Inchcape’s Retail business has been trading "broadly in line with our previous expectations despite conditions in the second half being more difficult than in the first".
However, the company says in a statement that trading at Inchcape Automotive, its refurbishment and logistics business, has not improved and its contribution will be lower than last year. Together with the previously announced changes to its Ferrari/Maserati business these factors mean that the UK business overall "will not meet our previous expectations, although we still expect the performance to be well ahead of last year".
As a result of the more difficult trading conditions experienced by Inchcape Automotive, it is expected that the year end accounts will include a goodwill impairment charge of around £9m relating to this business. Inchcape says it is confident it can still develop a “class-leading” automotive services group, which makes a good return on investment. This will, however, take longer than originally planned.
In Greece and Belgium (23.2% of operating profit) supply constraints are easing and trading has been in line with expectations. In Australia (15.4% of operating profit) Inchcape's performance has been "strong".
In Hong Kong (16.1% of operating profit) the car market has continued to recover and has been slightly stronger than expected.
"This strong overall performance demonstrates the benefits of our strategy of growing with selected manufacturer partners in, or adjacent to, our core markets, and of our geographic spread, which remains an important factor in the quality and sustainability of our earnings progression," Inchcape said.
Inchcape’s chief executive Peter Johnson also today announced an expansion of the group’s Eastern European business.
It has acquired two independent Mazda dealerships in Estonia for £5.3m and in Poland has opened two BMW and Mini dealerships.
Inchcape’s current business in Eastern Europe includes distribution for Toyota in Romania, Bulgaria and the former Yugoslav Republic of Macedonia) and exclusive retail for Toyota in Bucharest, Sofia and Skopje. It also imports and distribute for Mazda, Jaguar and Land Rover in the Baltic States. These businesses, in total, sold over 6,600 units in 2003 and had a turnover of about £75m.
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