Trade duties impact Inchcape's sales in the Asia-Pacific region, causing a 10% decrease in their share value
Inchcape, a British car distributor, has reported weaker first-half results, with a 15% drop in organic revenue from the Asia-Pacific region at constant currency. The decline is attributed to the impact of U.S. tariffs on high-end vehicle sales, particularly in Indonesia and the Philippines.
The tariffs have resulted in price increases and reduced competitiveness for luxury imports, leading to a decline in sales volumes in those markets. While Inchcape's Q2 2021 report does not provide specific details, related sources indicate that U.S. tariffs have disrupted auto sales internationally by increasing costs.
German automakers like Mercedes-Benz, with whom Inchcape has distribution agreements in Indonesia and the Philippines, have cited tariff impacts on their profits and sales internationally, including in China.
CEO Duncan Tait mentioned that Indonesia, the Philippines, and Hong Kong were among the weakest markets. Volumes in the premium segment slumped 40% year-over-year in Indonesia and 15% in the Philippines.
Despite these challenges, Inchcape retains its annual forecast of higher earnings per share growth and expects financial growth in the second half due to upcoming product launches across various brands with robust demand and orders.
Supply in the first half remained steady for Inchcape, despite concerns about exports and production cuts due to tariffs. Some indirect disruption to supply-related logistics caused by tariffs was insignificant for the company.
Inchcape's adjusted operating profit was 247 million pounds ($329.4 million) for the six months to June 30, down 12% at constant currency from a year ago. The Asia-Pacific region accounts for 28% of Inchcape's total revenue.
Analysts at JP Morgan called Inchcape's results a "softer print" compared with expectations, and Inchcape's shares traded down 7.6% after the report. Earnings fell 11% short of JP Morgan's estimates for Inchcape.
(Reporting by Unnamalai L and Shashwat Awasthi in Bengaluru)
(Editing by Sherry Jacob-Phillips and Helen Popper)
Note: The exchange rate is $1 = 0.7500 pounds. This article does not contain advertisements.
The tariffs have disrupted auto sales internationally and increased costs (finance), affecting industries such as car distribution (business), with Inchcape experiencing a 15% drop in organic revenue in the Asia-Pacific region (industry). The decline in sales volumes in Indonesia and the Philippines is attributable to the impact of U.S. tariffs on luxury imports, reducing competitiveness for these markets (industry).
