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Inchcape plc Trading in-line with expectations; £100m buyback announced

Inchcape plc (LON:INCH), the leading independent multi-brand Automotive Distributor and Retailer with global scale, today releases its Trading Update covering the period from 1 January 2019 to 22 May 2019. Figures quoted in this statement are for the four months ended 30 April 2019.

· Group revenue £3.1bn, up 3% in actual currency and 3% in constant currency

· Profit stabilisation in UK and Australia Retail operations

· Continued focus on capital allocation discipline; new £100m share buyback to be completed over 2019

· Progress on portfolio optimisation with the disposal of two retail sites in Australia

Revenue chg y-o-yActual currencyConstant currency *
Total Group+3%+3%

“I am pleased with our performance over the first 4 months. We continued to grow revenue and trading is in-line with our expectations.

Distribution, which comprised more than 90% of our profit in 2018, saw good revenue growth across most markets, most notably Asia, where growth was led by Singapore, and Europe. The continued integration of the new Central America operations was a further benefit. However, as expected, the impact of temporary Subaru supply constraints in Australia offset the growth elsewhere in Distribution and has had an associated margin impact. Retail’s continued strength in Russia over the period, driven by Ignite, was somewhat offset by expected sales weakness in UK and Australia Retail. Encouragingly, and as a consequence of the actions we have taken, profit across these two more challenging Retail markets has been broadly stable year-on-year and we are confident this will be maintained for the rest of the year.

In-line with our recent comments, we have made progress optimising our Retail portfolio. We are today announcing the disposal of our Honda and Mitsubishi retail sites in Australia, for cash proceeds of £11m which will result in a profit on disposal. These sites have been marginally loss making year-to-date.

Given the continued strong cash flow generation of our business and in-line with our disciplined capital allocation policy we are today commencing a new £100m buyback to be completed over the remainder of 2019.”

Performance year to date has been in-line with our expectations, and, overall, both Retail and Distribution are on track to deliver the profit guidance that we set out in February. Our outlook for 2019 therefore remains unchanged, and we continue to expect a resilient constant currency profit performance, excluding the transactional Yen headwind. Within our guidance we expect the Group’s H1 profit to be impacted by the supply constraints highlighted, although this will have normalised moving into H2.

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