Inchcape HY Pre-tax Profit Climbs; To Acquire Derco In GBP 1.3 Bln Deal

Inchcape (INCH.L), an independent multi-brand global automotive distributor, reported that its profit before tax for the six months ended 30 June 2022 climbed to 187.5 million pounds from 33.1 million pounds in the prior year.

Profit from continuing operations for the period increased to 140.7 million pounds from 2.3 million pounds last year.

Loss attributable to owners of the parent for the period was 103.0 million pounds or 27.2 pence per share compared to profit of 15.5 million pounds or 3.9 pence per share in the previous year.

Group revenue for the period was 3.9 billion pounds, an increase of 8% year-on-year reported and 9% in constant currency. The growth rate was supported by the addition of four new distribution businesses over the past 12 months, including Geely (Chile), commercial vehicles in Guam and Micronesia, Ditec (Chile) and Simpson Motors (Caribbean).

On an organic basis, excluding currency effects and net M&A, revenue increased by 12%, with the strongest performance in the Americas and in Europe, driven by a combination of continued (albeit still gradual) volume recovery and price-mix tailwinds.

The company said that its 2022 outlook remains unchanged from the prior outlook. It still expects to deliver fiscal year 2022 adjusted profit before tax from continuing operations to be between 350 million pounds and 370 million pounds at prevailing exchange rates.

In a separate press release, Inchcape said that it has signed an agreement to implement a business combination to acquire Derco, an independent automotive distributor in Latin America, for a cash and share consideration valuing Derco at 1.3 billion pounds on a debt and cash free basis.

In light of the Transaction, the company said it will not proceed with the second 50 million pounds tranche of its fiscal year 2022 100 million pounds share buyback program.

The company expects to publish a shareholder circular, including a notice of General Meeting by late September or early October 2022. Completion is expected to occur in late 2022 or early 2023.

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