Inchcape cuts operating margin guidance on Australian underperformance
By Michele Maatouk
Date: Thursday 22 Oct 2026
(Sharecast News) - Inchcape was under the cosh on Thursday after the automotive distributor cut its full-year operating margin guidance, pointing to underperformance in Australia.
In an update for the third quarter, Inchcape said volumes rose 3%, with organic revenue growth of 1% and reported revenue growth of 7% to £2.56bn. Total industry volumes (TIV) were up 9% in the same period.
Volumes in the Americas were up 10%, versus TIV up 24%. Inchcape hailed continued strong momentum, driven by volume growth across its brand portfolio, including Chinese OEMs, with supportive market conditions.
Europe and Africa saw volumes jump 21%, versus TIV growth of 2%. The company said there was broad-based growth in its core brands in Europe, enhanced by recently-won contracts with Chinese OEMs. Recent acquisitions in Iceland and Bulgaria are performing well, it added.
Volumes in Asia Pacific fell 37%, against TIV growth of 5%. The company noted further underperformance in Australia, where Inchcape volumes fell 50%, against TIV growth of 1%. As a result, Inchcape cut its full-year adjusted operating margin guidance to around 5.5% from around 6% previously. It said the underperformance in Australia is now expected to be margin dilutive in FY 2026.
Organic volume growth expectations were unchanged at the top end of the 3% to 5% guidance range. Guidance for free cashflow conversion was also unchanged, at more than 100%.
Chief executive Duncan Tait said: "Despite a challenging situation in Australia, Inchcape delivered a resilient performance in the third quarter reflecting our scaled and diversified business model and ongoing delivery against our Accelerate+ strategy. As anticipated, continued strong momentum in the Americas was underpinned by volume growth across our brand portfolio and, in Europe & Africa, broad-based growth across our core brands was also supported by recent contract wins and acquisitions. In addition, we made progress with our management actions to support our businesses in Asia.
"Australia remains a challenge - our key brand has underperformed, with deteriorating competitiveness in a rapidly-evolving market. We are taking further decisive action there, alongside our 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."
At 0940 BST, the stock was down 7.9% at 635.50p.
Jefferies, which rates the shares at 'buy', said new EBIT margin guidance implies a cut of around 8% to FY26 pre-tax profit consensus.
Broker Panmure Liberum, which rates the shares at 'hold', said it sees EBIT estimates for 2026 being cut more than 10%, with follow through to FY27 likely "given that it will take time to fix issues in Australia".
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