Inchcape shares slide on decline in revenue, operating profit

(Sharecast News) - Inchcape shares were sliding on Tuesday morning, after it reported a fall in first half revenue and operating profit, amid a challenging tariff environment. Revenue for the period stood at £4.3bn, down 4% in constant currency and 9% on a reported basis, with organic revenue falling by 3%.

Sequential improvements in quarterly organic performance partially offset the declines.

The FTSE 250 automotive distributor also faced a 1% reduction from the sale of a non-core retail asset and a 5% negative impact from foreign exchange fluctuations.

Adjusted operating profit decreased 4% in constant currency to £200m, while adjusted operating margin contracted to 5.7% from 6.3% in the first half of 2024.

Statutory profit before tax (PBT) dropped 5% to £186m, with total statutory profit holding steady at £129m.

Adjusted basic earnings per share (EPS) rose 2% to 35.5p, supported by share buybacks, while reported earnings increased 16% to 32.4p per share.

The company's balance sheet remained solid, with adjusted net debt reducing to £374m from £524m at the end of the first six months of 2024.

That resulted in a lower leverage ratio of 0.6x, compared to 0.7x in the first half of 2024.

Free cash flow generation totaled £72m, down from £226m, due to a working capital outflow related to supply chain phasing.

Shareholder returns were £220m, up from £100m.

Inchcape said its 'Accelerate+' strategy continued to deliver, with nine new distribution contracts secured and £150m of its £250m share buyback programme completed.

The acquisition of Askja, a leading automotive distributor in Iceland, further strengthened its geographic footprint and OEM portfolio.

Looking ahead, Inchcape reaffirmed its 2025 guidance, expecting growth despite ongoing tariff pressures.

Stronger growth in the second half of the year was expected, driven by product launches and robust demand, alongside continued focus on cost management, inventory control, and retail network optimisation.

The company said it remained on track to meet its medium-term target of over 10% compound annual growth in EPS.

"Against a fast-moving tariff situation, Inchcape delivered robust results for the first half of 2025," said CEO Duncan Tait.

"We remain focused on driving growth and value for shareholders, with our first acquisition since 2023 and an expanding OEM portfolio."

Tait said the company's Accelerate+ strategy would help to deliver another year of growth in 2025, with confidence growing in the second half.

"We continue to target over 10% earnings per share compound annual growth rate over the medium term."

At 0907 BST, shares in Inchcape were down 7.25% at 742p.

Reporting by Josh White for Sharecast.com.