Our results are stated at actual exchange rates. However, to enhance comparability we also present year-on-year changes in revenue and adjusted operating profit in constant currency, thereby isolating the impact of translational exchange rate effects. Following the disposal of our UK Retail business, all figures quoted in the 'Operational' and 'Operating and financial' reviews are on a 'continuing operations' basis and therefore exclude any contribution from UK Retail in the current and comparative years.

 

Operational review

Key performance indicators

Key financials (continuing operations)	2024	2023	% change reported	% change constant FX2	% change organic1
Revenue	£9,263m	£9,382m	(1)       %	+4       %	+2       %
Adjusted Operating Profit2	£584m	£620m	(6)       %	+2       %
Adjusted Operating Margin2	6.3     %	6.6     %	(30)bps	(20)bps
Adjusted Profit Before Tax2	£444m	£467m	(5)       %	+5        %
Free Cash Flow2	£462m	£492m	(6)       %
Return on Capital Employed2	26.9 %	27.3 %	(40)bps

1.  Organic growth is defined as revenue growth in operations that have been open for at least a year at constant foreign exchange rates, see Note 12 APMs

2.  These measures are Alternative Performance Measures, see Note 12

 

FY 2024 results - performance review

The Group delivered a resilient financial performance in FY 2024, driven by strong top line growth, with resilient margins supported by continued cost discipline across the Group.

Group revenue of £9.3bn, increased by 4% in constant currency, supported by organic growth of 2% and a contribution from acquisitions of 2%. This was offset by translational currency headwinds of (5)%, which meant that revenues were down (1)% on a reported basis.

The Group delivered adjusted operating profit² of £584m up 2% in constant currency, offset by (8)% translational currency headwinds. Resilient adjusted operating margins² of 6.3% were supported by cost discipline. Overheads were stable, with the ratio of adjusted net operating expenses to revenue of 11.0% during the year (2023: 11.1%). Reported operating profit was down (1)%.

Adjusted net finance costs² reduced to £142m (2023: £154m), driven by the positive impact of a reduction in average net debt on net interest costs. This was partly offset by an increase in inventory financing costs associated with a more stable working capital profile, which resulted in an expense of £56m (2023: £38m).

Adjusted profit before tax² grew 5% on a constant currency basis, offset by (10)% translational currency headwinds. Adjusted basic EPS² was down (7)% to 71.3p, also driven by translational currency headwinds, as well as a higher effective tax rate, partly offset by profit growth and the impact of the share buyback programme, which delivered 1p EPS accretion.

During the year, pre-tax adjusting items amounted to an expense of £30m (2023: £89m). This was primarily driven by one-off costs related to acquisition and integration costs of £42m (2023: £50m), mainly in relation to Derco, and non-cash, non-operational losses arising from hyperinflation accounting relating to Ethiopia of £8m (2023: £29m). These factors were partly offset by a gain on disposal of a non-core retail aftersales business in the Americas of £6m (2023: nil), and non-cash, net impairment reversals of distribution agreements of £14m (2023: nil). After adjusting items, reported profit before tax was £414m (2023: £378m).

The highly cash-generative nature of our business model was again highlighted during the year, with free cash flow² generation of £462m (2023: £492m), representing a conversion of profit after tax of 151% (2023: 150%). This was supported by a net working capital inflow of £195m (2023: inflow £169m) driven by strong inventory management and a continued alignment of supplier terms at acquired businesses. Inventory fell to £1,935m (FY 2023: £2,718m), driven by the impact of translational FX, the disposal of the UK Retail business, accounting for £336m of the reduction, the disposal of a non-core retail aftersales business in the Americas of £19m and an improvement in inventory efficiency across the Group. Net interest payments in the period increased to £128m (2023: £118m), excluding payment for leases in both periods, due to the timing of cash payments relating to inventory finance.  Net cash generated from operations down (1)% to £586m.

As at 31 December 2024, Group adjusted net debt² amounted to £190m, a significant reduction from FY 2023 when net debt was £601m (excluding lease liabilities). This was achieved due to a strong free cash flow performance of £462m and net proceeds from non-core asset disposals of £391m, set against cash outflows of £294m relating to dividends and share buybacks, and £153m relating to FX and other items. Including lease liabilities, the Group ended the period with net debt of £492m (FY 2023: net debt of £1,041m). Group leverage on a proforma basis¹ was approximately 0.3x at 31 December 2024, down from 0.8x at the end of FY 2023.

Return on capital employed² during the year was 27%, in line with FY 2023 on a continuing operations basis, but higher than previous years, highlighting the benefits of Inchcape becoming an automotive Distribution business.

Q4 2024 performance

Q4 2024 Group revenue was £2.4bn, with flat organic growth², offset by currency headwinds of (6)%. This was driven by positive organic growth in the Americas and a robust performance across the Europe & Africa region, offset by mixed market momentum in APAC.

Strategic overview - FY 2024: a transformative year for Inchcape

 

In FY 2024, Inchcape consolidated its position as leading global automotive Distributor. As a focused business, Inchcape will continue to develop its Distribution platform in smaller scale and more complex markets.

 

During the year, the Group launched an evolved strategic approach, Accelerate+, designed to help scale our organisation and optimise key elements of our business, enabling Inchcape to drive towards our ambition of growing towards 10% market share in our markets.

 

Scaling to drive market share growth

A key element of Accelerate+ is driving scale. This will enable Inchcape to grow market share in passenger cars in both existing and new markets and deliver growth through extending our distribution capabilities into adjacent vehicle categories, like light commercial vehicles and premium motorcycles. Scale will be achieved through executing and integrating value-accretive acquisitions and by winning and embedding new Distribution contracts with our OEM partners. Building scale will be supported by our market-leading technology capabilities.

 

Acquisitions and Distribution contract wins

Inchcape operates in a fragmented independent distribution landscape, where there are many opportunities to consolidate. Since 2019, the Group has executed 8 acquisitions and Inchcape will remain disciplined around investing in value-accretive bolt-on M&A opportunities.

 

Over the last five years, Inchcape has built up a portfolio of around 230 Distribution contracts with over 60 OEM partners. FY 2024 was a record year for Distribution contract awards to Inchcape, with 22 won during the year. These included Deepal, a Changan SUV brand, and Foton, a light commercial vehicle brand, in Australia. In addition, Inchcape won 14 new contracts in the Americas, including various Changan brands in a range of markets and Great Wall Motors in Colombia, with 6 contract wins in Europe and Africa, including BYD across a number of markets.

 

Furthermore, the 40+ Distribution contracts won between FY 2021 and FY 2024, are expected to contribute, on an average per contract basis at maturity (which tends to be during year 5 of a contract), of between £20m and £30m in revenue and between £1m and £2m in adjusted operating profit, with an anticipated increase in market share of at least 2%. 

 

Our differentiated technology

As a result of our on-going investment, Inchcape has developed a market-leading approach in the use of technology and data to support our OEM partners. We have developed a 'plug and play' model with DXP (Digital Experience Platform) and DAP (Data Analytics Platform) which provide us with insight and analytics that helps us to make smarter decisions and provide end-customers with an enhanced experience.

 

In 2024, we rolled out latest versions of DXP and DAP into more markets with more OEMs. In addition, we utilised new technologies to drive efficiencies across our business, for example in the development of an AI-based forecasting algorithm for parts which helps to ensure our OEMs' parts are competitively priced across our distribution channels

 

Optimising to support resilient margins

Our Accelerate+ strategy is also focused on optimising key elements of our business, to ensure Inchcape remains the most efficient and effective Distribution partner for our OEMs.

 

Discipline around contract exits

As the Group scales and grows, we aim to ensure that we have an optimal portfolio of brands which is best suited to our business and our markets. To that end, we periodically conduct a limited level of portfolio rationalisation, to help us optimise our market presence and leverage our infrastructure in the most efficient way.

 

In FY 2024, we mutually agreed to end 4 immaterial and dilutive Distribution contracts with certain OEM partners. We expect this dynamic to continue in future years, as we further rationalise our contract portfolio, to ensure we drive value for both Inchcape and our OEM partners.

 

Non-core asset disposals

We are optimising our business through the divestment of non-core assets, particularly retail-only businesses. Since 2019, we have disposed of a number of non-core retail assets, generating approximately £750m in net cash proceeds, including, in FY 2024, our UK retail business and a retail aftersales business in the Americas.

 

This track record of non-core asset disposal of retail-only assets has ensured that Inchcape is now fully focused on Distribution, which is capital-light, more cash generative, higher growth and higher margin than retail-only businesses.

 

Value-Added Services

The Group will also optimise through Value-Added Services, which provide an opportunity to grow in key areas, including:

 

•    The distribution of relatively high margin, OEM-certified parts, including through our Digital Parts Platform in APAC;

•    Developing and delivering Finance & Insurance products, by utilising our global scale and strategic partnership;

•    Supporting the New Energy Vehicle transition with early-stage, specialist capabilities;

•    Continuing to develop our used car proposition, leveraging our strong third party independent retail network.

 

Our Sustainability approach

Underpinning Accelerate+, the Group has enhanced its Sustainability Framework to address an evolving environment, with an ambition to accelerate the global mobility transition. Through virtual seminars, the Group built an understanding across senior leaders and colleagues in relation to a refreshed Sustainability narrative, which garnered over 7,000 views during FY 2024.

 

As evidence of Inchcape's ambition to accelerate the global mobility transition, in FY 2024, over 1,000 technicians enrolled in our Battery Repair Training Program. In addition, the Group initiated a partnership with the Singapore Polytechnic Academy, launching EV training courses, which were completed by around 260 employees, helping them to gain the essential skills to excel in the fast-evolving EV landscape.

 

The Group made progress against each of its four Sustainability pillars - Planet, People, Places and Practices, as highlighted by a number of key initiatives in FY 2024. On Planet, the Group achieved a 37% reduction in Scope 1 and 2 emissions since the 2019 baseline. On People, Inchcape achieved a 83% score in Inclusion & Diversity in our employee survey and rolled out an Inclusive Hiring Training Program for over 90% of hiring managers. On Places, we developed our Women Mechanics Training Programme in Uruguay, with planned expansion across the Americas. On Practices, over 16,000 colleagues were engaged through our annual Code of Conduct attestation.

 

New medium term targets, FY 2025 - FY 2030

Over the medium term, the Group will continue to deliver value for shareholders, supported by its key value drivers, highly cash generative and capital-light business model and a disciplined approach to capital allocation, the policy for which has been updated today to focus on dividends at 40% of adjusted basic EPS, a commitment to on-going share buybacks and value-accretive acquisitions.

 

Across FY 2025 to FY 2030, the Group expects to generate £2.5 billion in free cash flow. This will be achieved by the Group delivering against its key value drivers, through-the-cycle:

 

•    Organic volume CAGR of 3% to 5%, through market growth and market outperformance;

•    Resilient operating margins of c.6%, driven by scale and cost discipline;

•    FCF: PAT conversion of c.100%, highlighting the highly cash generative nature of the Group;

 

The £2.5 billion in free cash flow will be deployed through disciplined capital allocation to deliver shareholder value of >10% EPS CAGR, underpinned by consistently high ROCE of 25% to 30%.

 

Inchcape's medium term growth prospects will be supported by our diversified and scaled global market leadership position, with our long-standing and valuable OEM relationships and our differentiated technology capabilities.

 

Expectation of continued growth in FY 2025, with new share buyback of £250m 

In the context of the Group's new medium term targets, FY 2025 is expected to be another year of growth for Inchcape, at prevailing foreign exchange rates, with product cycles and the ramp-up of new contracts skewing growth towards the second half of the year.

 

The Group expects to deliver higher EPS growth in FY 2025, driven by profit growth and share buybacks.

 

In line with the Group's updated capital allocation policy, Inchcape is initiating a new share buyback programme of £250m, which will commence on 4 March 2025 and is expected to conclude within the next 12 months. This follows the completion of the Group's most recent share buyback of £150m in Q1 2025.

 

The Board is declaring a final dividend of 17.2p (2023: 24.3p) for FY 2024.