Inchcape (LON:INCH) reported what management described as a strong performance in 2025 despite tariff-related disruption and broader economic uncertainty, pointing to record profit before tax (PBT) in its Americas and Europe & Africa regions and improved momentum in the second half of the year. Group CEO Duncan Tait and CFO Adrian Lewis also highlighted continued progress against the company’s “Accelerate Plus” strategy, including new distribution contract wins, portfolio rationalization, and capital returns to shareholders.
2025 financial performance and cash generation
For 2025, Inchcape generated revenue of GBP 9.1 billion, with 1% organic revenue growth and resilient operating margins of 6.2%. Adjusted PBT was GBP 443 million, up 3% in constant currency, supported by GBP 17 million of gains from divesting non-core assets, partially offset by approximately GBP 19 million of translational currency headwinds.
Free cash flow was a particular highlight, reaching GBP 315 million, with a stronger second half performance. The company reported a 104% free cash flow conversion rate (free cash flow to adjusted profit after tax), which Lewis said aligned with medium-term targets. Closing leverage ended the year at 0.4x, down from 0.6x at the half-year.
Adjusted basic EPS was 80.8 pence, up 13%, which Lewis attributed predominantly to the lower share count from buybacks. The company declared a final dividend of 22.8 pence, bringing the total dividend for the year to 32.3 pence, also up 13% year over year.
Capital allocation: dividends, buybacks, and M&A
Management said the group returned around GBP 340 million to shareholders through dividends and buybacks during the year. Tait noted the company deployed cash toward a 13% increase in dividends per share, GBP 238 million in share buybacks, and GBP 35 million for the acquisition in Iceland. The company said it has a pipeline of bolt-on M&A opportunities, while Lewis added that a large deal is “not currently in our consideration set in the near term.”
The company announced a new GBP 175 million share buyback program expected to complete over the next 12 months. Lewis also said the averaging impact of buybacks should provide an EPS tailwind in 2026 of around 4%–5%.
Lewis reiterated Inchcape’s medium-term targets, including expectations to generate GBP 2.5 billion in free cash flow through 2030 and to deliver in excess of 10% compound EPS growth, supported by a dividend policy of paying 40% of earnings.
Strategy execution: contracts, portfolio optimization, and technology
Tait said Inchcape continued executing its Accelerate Plus strategy by scaling and optimizing its regions, expanding its OEM partner portfolio and geographic footprint, and aiming to reach 10% market share across its markets.
Inchcape reported 10 new distribution contracts with existing OEM brands, including:
- New Holland in Ethiopia and Kenya
- BYD in Lithuania and Latvia
- XPeng in Colombia
- GAC AION in Greece
- smart in Colombia, Uruguay and Ecuador
- Iveco in Hong Kong
The group also rationalized its brand portfolio by mutually exiting four immaterial contracts with Komatsu in Ethiopia and three Geely contracts in smaller markets in the Americas. Tait said the company expects to continue optimizing its OEM portfolio in 2026, exiting relationships when they do not meet return requirements.
Operationally, management discussed efforts to optimize inventory and costs, noting inventory cover at year-end 2025 was flat year-on-year after reducing a first-half build. Tait also described increased use of AI in parts pricing and demand modeling and said the company launched a vehicle pricing algorithm in Chile to analyze price-to-volume elasticity.
Regional performance: Americas strength, APAC pressure, Europe & Africa growth
Lewis said 2025 was a “year of two halves,” with stronger second-half performance supported by product launches. Group volumes grew 3% organically, outperforming market growth of 2%.
Americas: Market volumes and organic revenue both rose 8%, supported by improving market conditions and growth in scaled markets including Chile, Colombia, and Peru, offset by weaker performance in markets such as Costa Rica. Operating margins increased 70 basis points to 7%, aided by operating leverage and cost discipline. The region also included a GBP 8 million profit contribution from non-core asset divestments.
APAC: Market volumes declined 1% and organic revenue fell 12%. Lewis cited underperformance in Asian markets due to the proliferation of Chinese brands, high competition in markets with high BEV penetration, and continued weakness in the premium segment. Operating margins contracted 60 basis points to 7.2%, despite a GBP 9 million profit contribution from non-core asset divestments in the second half. Management said cost reduction actions were initiated, particularly focused on the regional headquarters and certain underperforming Asian markets.
Europe & Africa: Market volumes grew 3% and Inchcape’s organic revenue rose 6%, supported by contract wins from recent years. Operating margins were 4.6%, down 10 basis points, with management attributing the movement to initial dilution from immature distribution contracts, partially offset by scale and resilient gross margins. The Iceland acquisition was described as performing well, while Africa continued to grow through distribution contract expansion.
Outlook for 2026 and key topics from Q&A
Management guided to 2026 growth at constant currency in line with medium-term expectations, with organic volume growth toward the lower end of the 3%–5% range, supported by contract wins. The company expects resilient operating margins of circa 6%, free cash flow conversion of around 100%, and EPS growth of more than 10%. Performance is expected to be weighted toward the second half due to seasonality in the Americas and supply chain phasing in APAC.
During Q&A, executives discussed several topics, including:
- Value-added services/aftersales: Tait said aftersales is a higher-margin part of the business and he would like it to grow faster than new vehicle volumes over time. He noted aftersales gross profit grew 4% versus 3% new vehicle volume growth in 2025.
- BYD distribution in Europe: Management said BYD continues to insource distribution in medium-to-large European markets. Inchcape’s BYD contract in Belgium and Luxembourg contributed less than 5% of regional revenue and less than 2% of group revenue, and the company does not expect it to be renewed when it expires in Q3 2027.
- APAC actions and supply disruption: Lewis said production disruption tied to Japanese OEM production reconfiguration is expected to impact supply in the first half, particularly in Australia, with supply weighted to the second half. Management said cost actions are intended to help “underpin” margins and that more work may occur in the first half of 2026.
- Australia competition: Tait said the market has seen more Chinese OEM entries (rising from around 55 OEMs historically to closer to 80) but said he was not seeing a broad impact on pricing. He highlighted Subaru model introductions and launches such as FOTON and Changan’s Deepal range.
- Portfolio management (Geely/XPeng): Tait said the group worked constructively with Geely to move distribution in four smaller, “immaterial” Americas markets to other partners, while noting continued momentum with XPeng across markets including Colombia.
In closing remarks, Tait said the company’s confidence in 2026 is supported by the new GBP 175 million buyback program and reiterated the group’s medium-term targets through 2030.
About Inchcape (LON:INCH)
Inchcape is the leading global automotive distributor, with operations across six continents. By combining our in-market expertise with our unique technology and advanced data analytics, we create innovative customer experiences that deliver outstanding performance for our partners – building stronger automotive brands and creating sustainable growth. Our distribution platform connects the products of mobility company partners with customers, and our responsibilities span product planning and pricing, import and logistics, brand and marketing to operating digital sales, managing physical sales and aftermarket service channels.
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