Inchcape (LON:INCH) reported first-half revenue growth and maintained its full-year outlook, as strength in the Americas and Europe and Africa offset a weaker performance in Asia-Pacific, particularly Australia.
Group Chief Executive Duncan Tait said the automotive distributor continued to execute its Accelerate+ strategy amid rapid changes in the global vehicle market, including the expansion of Chinese manufacturers and the adoption of new-energy vehicles.
Vehicle volumes increased 9% organically, outpacing the 8% increase in market volumes across Inchcape’s markets. The company said Chinese original equipment manufacturers accounted for 25% of its volumes, excluding BYD and Benelux, with Chinese OEM volumes rising about 40% during the period.
Profit Held Back by APAC Margin Pressure
Adjusted operating profit was unchanged year over year at £248 million, while the adjusted operating margin declined 40 basis points to 5.3%. Lewis said margin contraction in APAC, led by Australia, was partly offset by margin expansion in the Americas and Europe and Africa.
Adjusted profit before tax fell 10% at constant currency to £188 million, reflecting higher net finance costs. Adjusted earnings per share were flat at £0.355, as the effect of lower profit and a slightly higher tax rate was offset by share buybacks.
Net finance costs increased by £14 million, driven by higher interest rates, increased inventory financing and currency timing effects. The company recorded £64 million of adjusting items, including £62 million related to restructuring. That total included £28 million from the derecognition of distribution contracts being exited in APAC, £22 million related to site exits and headcount reductions, and £12 million of inventory write-downs.
Free cash flow totaled £84 million in the half, equivalent to 65% conversion of profit after tax. On a last-12-month basis, free cash flow was £327 million and conversion was 112%. Closing leverage was 0.5 times EBITDA, remaining below the company’s self-imposed ceiling of one times EBITDA.
Americas and Europe Outperform, While Australia Weakens
In the Americas, market volumes rose 21% and Inchcape’s volumes increased 18%. Organic revenue rose 13%, while adjusted operating margin expanded 50 basis points to 6.5%. Lewis cited supportive conditions in Colombia and Peru, solid performance in Chile, resilient gross margins and operating leverage from higher volumes.
Chinese OEMs represented more than 40% of new-vehicle volumes in the Americas, supported by relationships including Changan and Great Wall Motors. The company also noted late-period vehicle supply disruption related to Middle East shipping conditions.
In Europe and Africa, market volumes increased 4%, while Inchcape volumes rose 13%, including the contribution from the Iceland acquisition. Organic revenue grew 7%, and adjusted operating margin improved 20 basis points to 5.1%. The company said Southern and Eastern European markets remained resilient and Africa was robust, despite some supply disruption.
APAC was the principal area of weakness. Market volumes increased 4%, but Inchcape volumes fell 16% and organic revenue declined 7%. The regional adjusted operating margin contracted 290 basis points to 3.5%.
Tait said Australia faced a combination of supply constraints and a rapid shift in consumer demand after fuel price and availability disruption related to the Middle East situation. New-energy vehicles rose to 35% of total Australian sales, while EV penetration increased from just above 8% in January to nearly 25% in June, according to the company.
“The portfolio of vehicles we’d landed was out of whack, frankly, with where the market was,” Tait said, adding that product availability and mix were expected to improve in the second half.
Contract Exits and APAC Restructuring
Inchcape is exiting 13 immaterial APAC distribution contracts that generate about £140 million of annualized revenue but dilute profitability. The company also exited two contracts in the Americas. In aggregate, the 15 contracts represented about 5,000 new vehicles in 2025, or approximately 1.5% of group volumes.
The APAC program includes headcount reductions, potential disposals of non-core businesses and some retail-operation exits. Inchcape classified its Jaguar Land Rover business in Thailand as held for sale. Tait said additional contract exits are expected in the second half and beyond, including some more recently won contracts.
The company appointed Ian Burton as APAC CEO, succeeding interim APAC CEO Phil Jenkins, who will return to his role as chief M&A officer.
At the same time, Inchcape won five distribution contracts in the first half: Volvo in Ecuador, Deepal in Barbados, Subaru and Xpeng in Brunei, and GAC Aion in Romania. It also completed the acquisition of Silver Star in Bulgaria on July 1, adding Mercedes-Benz, Daimler Trucks and Buses to its portfolio in that market.
Outlook and Capital Returns
Inchcape reaffirmed its expectation for strong earnings-per-share growth in 2026, in line with its medium-term target of more than 10% annual EPS growth through 2030. The company expects organic volume growth toward the upper end of its 3% to 5% guidance range, an operating margin of about 6%, and free-cash-flow conversion above 100%.
The company expects second-half new-vehicle volumes of about 200,000, compared with 180,000 in the first half. The increase is expected to be supported by seasonal strength in the Americas, improved product availability and margin actions in APAC, and the contribution from the Silver Star acquisition.
Inchcape increased its share buyback program by £75 million to £250 million, having completed about 40% of the original £175 million program. The company expects the enlarged buyback to be completed by the end of February 2027. It also declared an interim dividend of £0.108 per share, up 14% from the prior year.
About Inchcape (LON:INCH)
Inchcape is the leading global automotive distributor, with operations across six continents. By combining our in-market expertise with our unique technology and advanced data analytics, we create innovative customer experiences that deliver outstanding performance for our partners – building stronger automotive brands and creating sustainable growth. Our distribution platform connects the products of mobility company partners with customers, and our responsibilities span product planning and pricing, import and logistics, brand and marketing to operating digital sales, managing physical sales and aftermarket service channels.
