Inchcape Plc Shares Race Ahead

Shares inmulti-national card dealer Inchcape (LSE: INCH) raced ahead by 7% earlier today to 630p as it announced a record pre-tax profit of £147m — a 10.7% increase. Sales rose by 6.6% to £3.3bn for the first half period, and adjusted earnings per share increased by 10.6% to 22.9p

The group, which sells and distributes premium and luxury cars in 26 countries, said that it continued to benefit from strong sales and profit performance in its Asia Pacific and Emerging Markets — buoyed by its recently completed acquisition of Australian car-dealer group Trivett.

Combined, Asia Pacific and the Emerging Markets accounted for some 70% of Inchcape’s reported trading profits over the past six months.

The group also announced today that would be raising its interim dividend to 5.7p — a 43% increase — and revealed that it would commence a £100m share buyback programme over the next 12 months.

Commenting on the results, Inchcape’s group CEO, André Lacroix, said:

“We have delivered a robust performance in the first half of the year … despite challenging trading conditions in some of our markets…  The Group continues to benefit from strong sales and profit performance in Asia Pacific and the Emerging Markets … we continue to expect the Group to deliver a robust performance in 2013 despite competitive pressure on vehicle margins in some of our markets.

“Our confidence in the Group’s earnings potential and our highly cash-generative business model is reflected in our progressive dividend policy … and in today’s announcement of a £100m share buyback programme …”

Inchcape’s shares have risen by almost 57% over the past year and currently trade of a forward P/E of around 14 times earnings.

6 out of 10 brokers currently rate the shares as a ‘buy’, however only you can decide whether they really do represent a ‘buy’ at this price.

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> Andy does not own the shares mentioned.