International automotive distributor and dealer, Inchcape, which owns Inchcape Fleet Solutions, has surprised the stock markets by posting better than expected half-year results.

Inchcape Fleet Solutions, which sits at number 15 in the FN50, operates a fleet in excess of 53,000 cars.

It saw trading profits rise by 6.2% compared to 2008 thanks mainly to the rise in residual values since the start of the year.

On the back of the results, investment analysts Panmure Gordon have upgraded Inchcape’s shares from "hold" to "buy".

The share price rose by 13% in early trading.

Much of the group’s positive results were thanks to several highlights according to the statement published this morning:

  • Increased share in most markets
  • Continued strong aftersales contribution
  • Significant like for like cost reduction of 13%
  • Rapid reduction in net debt to £28m, down from £408m at year end:
    o strong operating cash flow generation of £217m
    o net proceeds of £234m from successful rights issue

“The group has delivered a resilient performance in the first half of this year, demonstrating the strengths of our unique business model in a downturn and the responsiveness of our organisation to unprecedented market conditions,” said André Lacroix, CEO of Inchcape.

“Despite particularly challenging trading conditions, our operational focus on executing our five group-wide priorities - of growing market share and aftersales, whilst reducing costs, managing working capital and reducing capital expenditure - has delivered a strong cash flow performance.

"Combined with our recent successful rights issue, this has considerably strengthened our balance sheet.

“However, in light of the global downturn, we remain cautious for the second half.”