Inchcape (INCH) shares skidded 10% lower to 784p after the automotive distributor downgraded its current year growth forecast.
| Share price: 784p | PE: 9.8x |
| Market cap: £3.1bn | Yield: 4.1% |
The cautious outlook overshadowed robust FY25 results and the launch of a new £175 million buyback.
Inchcape is now guiding for FY26 organic volume growth towards the lower end of its 3% to 5% target range. The FTSE 250 firm also warned performance will be second-half weighted, often a red flag for investors.
APAC problems
The downgrade reflects continuing challenges in the company’s Asia Pacific (APAC) operations.
‘For FY26, it is expected that Australia remains stable but challenges in other markets in the region are expected to continue, with production disruption impacting certain APAC markets in H1,’ said Inchcape.
The group reported 1% organic revenue growth to £9.1 billion for FY25. Pre-tax profit revved up 3% to £443 million in constant currency.
The solid showing was driven by market share gains and distribution contract wins, with improved momentum in H2.
However, reported revenue was down 2% due to the impact of currency headwinds.
Having completed a £250 million share buyback, the company launched a fresh £175 million programme for 2026.
What did the CEO say?
‘During a transformative year in the automotive sector in FY 2025, Inchcape’s diversified and scaled business model delivered results in line with our medium-term targets,’ said CEO Duncan Tait.
He explained the FY25 performance was driven by ‘good momentum in our Americas and Europe and Africa regions’. He insisted Inchcape is ‘taking actions to address challenges in APAC.’
Tait continued: ‘We made further strategic progress during the year, winning 10 new distribution contracts.
‘In addition, we executed a value-accretive bolt-on acquisition in Iceland, a new market for Inchcape, enabled by our highly cash generative business model and strong balance sheet.’
Inchcape is taking market share against a backdrop of a transforming global auto industry. The company has a strong balance sheet and a ‘healthy pipeline’ of bolt-on acquisitions to drive future growth.
Nevertheless, given the potential for tariff-related disruption, currency headwinds and a challenging APAC region, investors should wait for a better entry point.
Read the press release here: https://www.inchcape.com/en/news-and-insights?location=global
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