Inchcape shares slide as cuts outlook amid challenging Australia trade
Inchcape PLC on Thursday lowered its earnings and margin guidance for 2026 to reflect a "challenging situation in Australia", which overshadowed volume growth elsewhere.
In response, shares in the London-based automobile distributor slumped 8.5% to 631.50 pence each in London on Thursday morning.
In a trading update, FTSE 250-listed Inchcape said: "Australia remains a challenge - our key brand has underperformed, with deteriorating competitiveness in a rapidly-evolving market."
The firm said it is taking "further decisive action" in the country, alongside existing restructuring activity.
"We are confident these actions will improve our business in Australia over time, but we expect the current challenges in that market to continue impacting our performance there," it added.
As a result, Inchcape now expects a group operating margin for 2026 of around 5.5%, down from 6.0% previously guided, with adjusted earnings per share growth of around 10%, underpinned by continued momentum in the Americas and Europe & Africa.
In July, Inchcape said it expected more than 10% growth in adjusted EPS for the full year from 80.8p posted in 2025.
Australia is now expected to be margin dilutive in 2026.
Inchcape said Asia Pacific volumes, which includes Australia, were down 37% in the quarter year-on-year. In Australia alone, Inchcape volumes plunged 50%, it said.
In Australia, Inchcape said the impact was exacerbated by deteriorating competitiveness of a key original equipment manufacturer partner - which Citigroup said is Subaru - leading to margin pressure.
Elsewhere, the picture was brighter with volumes up 21% in Europe & Africa, and 10% in the Americas.
Despite the setback, Chief Executive Duncan Tait said he has "continued confidence" in the medium term ambition of delivering more than 10% EPS compound annual growth to the end of 2030.
Berenberg lowered its share price target to 970p from 1,170p, and said "investors will now want to see decisive management execution against the Australian challenges."
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