A Strategic Approach to Growth in a Global Market

Transcription

1 A Strategic Approach to Growth in a Global Market André Lacroix Group CEO Sanford Bernstein Conference 22 September 2010

2 Global industry leader operating in the premium sector with strong returns. Strengthened industry leading position during the downturn and robust recovery in Business geared to deliver significant operational leverage, benefiting from lower cost base. Uniquely positioned for growth as Asia Pacific and the Emerging markets account for 62% of Group trading profit. 2

3 Business model 3

4 Proven business model Six years of growth to 2008, with strong returns Peak operating cashflow during the downturn Significant operational leverage benefits as recovery commences Broad geographic spread with scale operations Portfolio of leading premium brands Multiple channel route to market: Distribution and Retail Diversified revenue streams from growth and defensive value drivers Decentralised and empowered organisation, close to the market 4

5 Broad geographic spread 26 markets Emerging and developed markets Scale positions Leader in 14 markets Significant competitor barriers to entry Scale presence across emerging and developed markets 5

6 Leading premium brands as core partners Portfolio of the world s leading premium automotive brands Long-standing relationships Premium brands pricing power deliver superior margins Strong R&D capability to lead powertrain and segment innovation Creating value from the world s leading automotive brands 6

7 Multi-channel route to market Multi channel business Manufacturer Distributor Retailer OEMs Inchcape 2009 Distribution Retail Sales: 43% 57% Trading Profit: 71% 29% Distribution: Master-franchise partner operating as exclusive national sales and marketing company Vertically Integrated: National Distributor and exclusive Retailer in city states Retail: Scale operations on a regional basis c.1000 retail centres in 26 markets 7

8 Diversity of revenue streams Vehicle Sales - New and Used Finance & Insurance Products Growth Value Drivers 50% of gross profit Aftersales Service Parts Defensive Value Drivers 50% of gross profit Value driver focus delivering strong margins 9

9 Decentralised and empowered organisation In-depth market knowledge Swift response to changing market conditions Global alignment on processes, controls and performance measures Best practice sharing Global alignment ~ Local empowerment 10

10 Strategy 11

11 Inchcape Vision and Strategy To be the world s most customer centric automotive retail group STRENGTHEN Superior customer value proposition through Inchcape Advantage EXPAND Consolidation in high margin / high growth areas 12

12 Inchcape Advantage Our competitive advantage Proprietary operating processes and metrics Group-wide benchmarking Insights through leading indicators Customer-centric operational excellence a key advantage for emerging market expansion STRENGTHEN The customer funnel Creating the ultimate customer experience for our brand partners 13

13 Wealth creation in Emerging Markets will provide profitable growth opportunities in premium segment 60,000 50,000 Car parc per 1,000 population USA Finland Belgium Germany Australia EXPAND GDP per capita (USD) 40,000 30,000 20,000 10,000 0 UK Singapore Hong Kong Greece Estonia Russia Poland Latvia Lithuania Chile Romania China Bulgaria Peru India Car parc per 1,000 population Source: Global Insight Industry Forecast Reports, International Monetary Fund Note: Data based on 2008 figures 14

14 Scale retail facilities delivering superior returns in Emerging Markets 15

15 Performance 16

16 Focus on Five Top Operational Priorities Strategy Growing market share Growing aftersales Commercial initiatives Improving margin Controlling working capital Selective capital expenditure Cash initiatives Balanced focus on cost / cash flow and customer service / market share 17

17 2009: Strengthened industry leading position during the downturn Swift and responsive management of unprecedented downturn. Improved competitive position with balanced focus on: Cost / cash initiatives Customer service / market share performance Resilient financial performance: Record operating cash flow generation Strength of balance sheet re-established Decisive response to downturn has placed Inchcape in unique position to take advantage of market recovery 18

18 2010: Robust H1 recovery and significant operational leverage opportunities as we return to our peak Sales bn Revenue H H H % m Operating profit* H H H % m Profit before tax* H H H % m Net cash/(debt) (40.0) (28.1) (80.0) (120.0) (160.0) (200.0) (271.4) (240.0) (280.0) H H H Improved financial position and confidence in the Group s earnings recovery * Pre exceptional items All at actual rates 19

19 Strongly positioned for growth 20

20 Five key global trends Strongest players will lead industry consolidation Uneven global economic recovery Car parc growth in both Emerging and Developed markets Post-downturn, customers increasingly seeking value-for-money Growth in Emerging markets driven by wealth creation. Growth in Developed markets driven by green technology 21

21 Uneven global recovery Key global trend Uneven global economic recovery with Asia-Pacific and Emerging Markets recovering first and fastest Broad geographic footprint in Emerging and Developed markets Operations in 21 fastest-growing economies delivering 62% of trading profit Clear focus during the recovery on operational leverage from lower cost base Resilient Aftersales business representing c.50% of Group gross profit Broad geographic portfolio and diversified revenue streams 22

22 Emerging and Developed market growth Key global trend Growth in Emerging markets driven by wealth creation. Growth in Developed markets driven by green technology. Global TIV* % [Source: Global Insight] * World Total Passenger Car Industry Volume Increasing car penetration in APAC & Emerging markets providing profitable growth opportunities in the premium sector Strong lifestyle aspirations to luxury brands Richer mix / bigger vehicles and accessories Acceleration of car replacement cycle in Developed markets Customers seeking better value for money over total cost of ownership Government incentives to reduce age of car parc and emissions Structural growth opportunities in Emerging and Developed markets 23

23 Importance of value-for-money Key global trend Post downturn, customers increasingly seeking valuefor-money Inchcape s OEM partners provide strong customer value / higher engine performance with lower cost of ownership / less emissions Inchcape Advantage programme delivers superior customer service at every stage of the customer cycle Strong innovation pipeline thanks to R&D strengths of our brand partners Shorter lifecycle Segment innovation Greener powertrains Market share growth through superior customer value proposition 24

24 Growing car parc Key global trend Car parc growth in both Emerging and Developed markets Global UIO* % [Source: JD Power] Growth in Used vehicle sales Growth in high-margin Aftersales from Service and Parts during both warranty and post-warranty periods Opportunities to expand F&I penetration * World personal vehicle car parc Growth opportunities across the value chain 25

25 Industry consolidation Key global trend Strongest players will lead industry consolidation Well positioned to gain access to Distribution and Retail expansion opportunities in APAC/Emerging Markets Long standing partnerships with the strongest OEMs Proven track record of effective brand stewardship Disciplined process to integrate acquisitions and establish synergies Strong Balance Sheet Consolidation opportunities in high margin premium sector and fast growing APAC / Emerging Market areas 26

26 Conclusion 27

27 Global footprint uniquely positions Inchcape for future growth Inchcape in 21 fastest-growing economies moving forward Inchcape markets % Inchcape Revenue % Inchcape Trading profit GDP growth CAGR (Source: IMF) TIV growth CAGR (Source: Global Insight) Asia-Pacific & Emerging Markets 21 41% 62% +11.0% +5.9% UK & Europe 5 59% 38% +3.5% +3.2% Uniquely positioned for growth in high margin premium sector and fast growing APAC / Emerging Markets 28

28 Inchcape All rights reserved. Proprietary and confidential information. No unauthorised copying or reproduction. Inchcape and the Inchcape logo are the registered trademarks of the Inchcape Group. The information contained in this presentation has been obtained from company sources and from sources which Inchcape believes to be reliable but it has not independently verified such information and does not guarantee that it is accurate or complete.