Inchcape half-year results: buyback rises to £250m as EPS growth target strengthens

Inchcape PLC has paired decent first-half growth with a bigger share buyback and a confident earnings outlook, although the underlying performance was far from uniform.

Revenue increased by 9% to £4.72 billion in the six months to 30 June 2026, helped by distribution contracts secured in recent years, acquisitions and favourable currency movements. Organic revenue growth, which strips out acquisitions and currency movements while including contract wins, was 5%.

The headline attraction is management's expectation that adjusted earnings per share will grow by more than 10% across the full year. Inchcape also increased its current share buyback programme by £75 million to £250 million.

However, investors need to balance that confidence against weaker group margins, higher finance costs and a sharp decline in profitability across Asia-Pacific, particularly Australia.

Inchcape's key half-year figures

Metric	H1 2026	H1 2025	Change
Revenue	£4.72 billion	£4.32 billion	9%
Organic revenue growth	5%	Not disclosed	Not applicable
Adjusted operating profit	£248 million	£247 million	Broadly flat
Adjusted operating margin	5.3%	5.7%	Down 40 basis points
Adjusted profit before tax	£188 million	£200 million	Down 6%
Statutory profit before tax	£124 million	£186 million	Down 33%
Adjusted basic EPS	35.5p	35.5p	Flat
Free cash flow	£84 million	£72 million	Up 17%
Interim dividend per share	10.8p	9.5p	Up 14%

A basis point is one-hundredth of a percentage point, so the 40 basis-point margin decline is equivalent to 0.4 percentage points.

The revenue performance was solid, with new vehicle volumes rising by 9%. The more awkward detail is that this extra activity did not translate into comparable profit growth.

Adjusted operating profit was broadly unchanged at £248 million and declined by 2% at constant currency. Adjusted profit before tax fell by 6% to £188 million, largely because net finance costs increased from £48 million to £62 million.

Why statutory profit fell much faster

The gap between adjusted and statutory profit is particularly important in these results.

Statutory profit before tax declined by 33% to £124 million after Inchcape recognised £64 million of adjusting items. These were mainly restructuring costs connected with contract exits, inventory write-downs, site closures and headcount reductions, particularly in APAC.

The restructuring charge included:

• £28 million from derecognising distribution contract assets
• £12 million of inventory write-downs
• £22 million relating to site exits and headcount reductions
• £2 million of acquisition and integration costs

Management treats these costs as adjusting items because it believes the adjusted figures better represent underlying trading. That is a common approach, but the cash and accounting consequences are still real.

For investors, the question is whether the restructuring produces a leaner and more profitable APAC business, rather than becoming a recurring feature of the results.

Strong Americas and Europe performance offsets APAC weakness

The group's geographical diversification did its job during the half. Strong performances in the Americas and Europe & Africa offset a difficult period in APAC.

Region	Revenue	Organic growth	Adjusted operating margin
Americas	£1.76 billion	13%	6.5%
Europe & Africa	£1.85 billion	7%	5.1%
APAC	£1.11 billion	Down 7%	3.5%

Americas delivers the strongest momentum

Americas revenue increased by 17% on a reported basis and 13% organically. Adjusted operating profit rose by 28% to £115 million, while the margin improved from 6.0% to 6.5%.

Inchcape pointed to supportive market conditions, higher volumes and cost discipline. The region represented 46% of group adjusted operating profit, making it the largest profit contributor during the period.

Europe & Africa continues to outperform

Europe & Africa also performed well. Revenue rose by 17% to £1.85 billion, with organic growth of 7%. Adjusted operating profit increased by 21% to £94 million and the margin improved slightly to 5.1%.

Growth came from market outperformance, contracts won in previous years and the Askja acquisition in Iceland. There was some supply disruption in Africa linked to the Middle East situation, but this did not prevent the region from expanding profit.

Australia remains the main problem

APAC revenue fell by 9%, while adjusted operating profit more than halved from £79 million to £39 million. Its operating margin dropped from 6.4% to 3.5%.

Australia was the principal source of weakness. Inchcape cited fuel disruption, a consumer shift towards lower-priced and new-energy vehicles, supply constraints and an unfavourable product mix.

Management is responding by reducing costs, changing pricing and product mix, and exiting weaker contracts. Across the group, Inchcape is leaving 15 immaterial and profit-dilutive contracts that represented around 5,000 vehicles in 2025, equivalent to approximately 1.5% of group new vehicle volumes.

Cash flow and balance sheet support higher shareholder returns

Free cash flow increased by 17% to £84 million, while return on capital employed rose from 27% to 31%. Adjusted net debt stood at £329 million, excluding lease liabilities, and leverage remained modest at 0.5 times adjusted net debt to EBITDA.

That balance-sheet position has allowed Inchcape to increase its current buyback programme from £175 million to £250 million. The programme is expected to finish by the end of February 2027.

Buybacks reduce the number of shares in issue and can support earnings per share, provided the company buys stock at a sensible valuation and does not weaken its finances. Inchcape's adjusted EPS was unchanged at 35.5p in the first half, with buybacks offsetting the weaker profit performance.

The interim dividend also increased by 14% to 10.8p per share. It is due to be paid on 14 September 2026 to shareholders on the register at the close of business on 7 August.

Full-year guidance depends on a stronger second half

For 2026, Inchcape expects:

• Adjusted EPS growth of more than 10%
• Organic volume growth at the top end of its 3% to 5% range
• An adjusted operating margin of around 6%
• Free cash flow conversion above 100%
• Stable performance at constant currency

The company expects the year to be weighted towards the second half. New vehicle volumes are forecast to rise by around 20,000 from approximately 180,000 in the first half.

Management expects the Americas to benefit from its usual seasonal pattern. APAC should receive support from better product availability, an improved sales mix and restructuring benefits, while Europe & Africa is expected to remain stable compared with the first half.

Inchcape also completed the £162 million acquisition of Silver Star on 1 July 2026. The business distributes Mercedes-Benz passenger vehicles and Daimler trucks and buses in Bulgaria, and should contribute during the second half.

What matters next for Inchcape investors

There is plenty to like in these results: revenue is growing, cash generation has improved, leverage is low, the dividend is up and the buyback has been expanded. The Americas and Europe & Africa are also delivering profitable growth.

The tension sits in APAC and the reliance on a stronger second half. Group margins declined despite higher volumes, finance costs rose and statutory profit was hit by substantial restructuring charges.

Inchcape's more than 10% adjusted EPS growth target therefore rests partly on management actions delivering the expected APAC improvement, as well as currency benefits, acquisitions and buybacks. Progress in Australia, group margin recovery and full-year cash conversion will be the key measures to watch.

The full figures and accounting notes are available in the original company announcement.