Friday, October 17, 2008
Inchcape Restructure & Profit Warning
Inchcape has informed dealers this morning of its intentions to streamline the business following a profit warning to the City this morning.
Inchcape has revealed that its results for 2008 will be “below consensus” and 2009 will also be “significantly below our previous expectations”.
In a statement to the stock market, the dealer group said: “Trading conditions have deteriorated significantly in the UK and are weakening in a number of our other markets.”
Ken Lee, Inchcape group communications director, said: “The first nine months of the year produced a pleasing set of results for us. However, since quarter three there has been a drop off in consumer confidence.
“We’re looking at the size of the organisation and we’re about to step into consultation on a site by site basis across the country, including our group head office.”
Inchcape wants to make a group saving of £55 million as a result of the restructuring and are focussing on reducing overheads, particularly in the back office.
Lee confirmed that jobs are likely to be lost but he could not confirm how many.
He said: “We have contacted dealers this morning about streamlining the business and that’s a process we’ll be stepping into over the coming days.
“We’re looking closely at the back office but we don’t want the restructuring process to affect our customer service focus.”
Lee added that it was a difficult message to deliver during difficult times, but it was an opportunity for Inchcape to differentiate itself from other auto retail businesses.Trading for the nine months ended September 30, 2008 showed group sales were up by 6.7% and in line with the same period last year in constant currency.
Like for like group sales were down 1% and the group's operating margin was in line with last year at 4.8%.
The group's underlying pre-tax profit for the nine months was up 2.2% in sterling terms and down 7% in constant currency compared to the same period last year.
Inchcape's share price fell from 50p to 39p in reaction to the news.
DATED: 17.10.08
FEED: AM
