Inchcape PLC (LSE:INCH) posted £2.8 billion of revenue for the third quarter of 2023, up 35% year on year, reporting strong growth in automotive distribution after its merger with Derco.
Sales from distribution at the London-based car distributor and retailer rose 47% year over year, while retail was up 2%, it said in a trading update on Thursday.
The group said in a statement that there was “continued momentum” across the Asia-Pacific region, and “resilient performance” in the Americas while consumer demand in Europe was muted.
According to Liberum's analysts, the company broadly met analysts’ expectations for the third quarter.
The broker said in a research note on Thursday that the accelerated synergies with Derco, an automotive distributor in Latin America that Inchcape bought last year, offset weaker markets in Chile and Colombia.
Liberum cut its 2024 estimate for the company’s profit before tax by 2%, stating that “shares had been discounting a warning, rather than the resilient performance that has been delivered”.
The broker said “the longer-term buy and build opportunity is large”, that the company’s balance sheet is strong and that it expects return on capital employed to improve.
Its analysts meanwhile cut the discounted cash flow-based target price for Inchcape from 1,300p to 1,270p, where they would see fair value in its share price, but maintained a ‘buy’ recommendation.