Inchcape issues warning on Europe and emerging markets

International car dealer Inchcape has reported a rise in profits for the half year while issuing a warning on continuing weakness in Europe and slowing growth in emerging markets.

The group, which operates in 26 countries, reported sales of £3.1bn for the six months to the end of June versus £2.9bn at the same point last year.

Profits before tax have come in at £134.2m, up 5.8% in actual currency terms on the previous year.

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Those solid numbers have allowed the firm to announce an interim dividend of 4p per share against 3.6p last year.

So far so good, but things are not quite as rosy as they appear from the bald numbers.

Given how well Inchcape has done, its outlook statement is very cautious. The group says it expects demand in Europe to remain weak, with no improvement in trading conditions in the short term.

In Asia Pacific and emerging markets, which produce over two-thirds of profits, the group expects growth to slow as customers become concerned about the global economy.

There is already some evidence of this. For the emerging markets division as a whole, trading profit fell 2.2% to £24.6m between January and June. It seems this was due to a poor second half which saw weakening demand in places like Russia and the Baltics.

Inchcape's Chief Executive Andre Lacroix noted that the first quarter was "ahead of expectations" so by implication, the second quarter was not. The market clearly has some concerns, at 09:39 the stock had fallen 3.4%.

BS