Inchcape drives down costs but road ahead still bumpy

The firm, which sells and distributes cars for manufacturers including BMW, Mercedes-Benz, Honda and Toyota in 26 countries, said profit before tax and one-off items fell 19 per cent to 155.1m last year on an 11 per cent fall in sales to 5.6bn. That was ahead of analysts' profit forecasts of 141m-151m, and helped by about 70m of savings and the resilience of the group's used-cars and servicing businesses.

"In 2010, we expect to benefit from continued market momentum in Hong Kong and Australia and stable industry in Belgium and Finland but we also continue to anticipate market declines in the UK, Greece, Singapore, Eastern Europe and Russia," said chief executive Andre Lacroix.

"We therefore remain cautious for 2010 and do not expect a global recovery to start until well into the second half of this year given consumer confidence is still weak and unemployment continues to rise in many of our key markets."

Rival Lookers earlier this week reported a doubling in 2009 profit and a strong start to 2010, while Pendragon said last month it had swung to a profit last year after a loss in 2008.

Inchcape shares, which plunged around 90 per cent in 2008, recouped about half of their losses last year as the group eased fears about its future by slashing costs and raising around 250m in deeply discounted rights issue.

But the stock has been under pressure so far this year from concerns about its exposure to a weak economy in Greece and to a recall of Toyota cars on safety concern.

Inchcape shares closed at 28.26p, down 1.27p.