Inchcape plans big China drive

MOTOR dealer Inchcape is to expand into eastern Europe and China. It is targeting Beijing, Shanghai and Guangdong for new dealerships and reckons eastern Europe could see annual car sales growth of 15%.

Inchcape has £164m in the bank after profits rose 31% to £83m in the first half. The interim dividend is up 25% to 15p.

The company said profits had been driven by record business at its lucrative Singapore operations after the country relaxed restrictions on car ownership, though other divisions had also performed strongly. And it went on to downplay worries that rising interest rates would crimp the profitability of its British operations, where operating profits leapt 38.5% to £13.3m.

Inchcape said overall profits would have been £4.8m higher had the Singapore and Hong Kong dollars not weakened.

But finance director Alan Ferguson warned the company would do well to match the £27m it made in the second half of last year, given that the bulk of the permits issued for the period were for smaller cars.

Broker Dresdner Kleinwort Wasserstein reiterated its 'add' rating on the stock and said its share price valuation remains under review, given the potential for Inchcape to grow profits by at least 5% more than it had expected this year.