Inchcape Plc (INCH), the largest publicly traded U.K. car retailer and wholesaler, rose the most in 16 months as the company raised its interim dividend by 43 percent and unveiled a plan to buy back shares.
The stock rose as much as 11 percent, the biggest intraday increase since March 13 last year, and was up 8.6 percent to 637.5 pence at 2:07 p.m. in London, making Inchcape the third-largest gainer on the STOXX Europe 600 Index. About 1.9 million shares traded, 2 times the three-month daily average.
“It’s a sign that the company is more confident than ever about the outcomes of future deals and their potential impact on earnings,” Mike Allen, an analyst at Panmure Gordon & Co. (PMR), said in a telephone interview.
The retailer, which once shipped tea and cotton from India, raised its interim dividend to 5.7 pence a share from 4 pence a year earlier. Analysts surveyed by Bloomberg expected an increase to 4.5 pence. The retailer also announced a share-buyback plan of 100 million pounds ($153 million) over the next year.
Inchcape’s revenue in the first half of the year rose 6.6 percent to 3.3 billion pounds. Pretax profit after one-time gains or costs rose 10.7 percent to 147 million pounds, topping analysts’ expectations of 136 million pounds. Net cash was 189.1 million pounds as of June 30, about 6.4 percent of market capitalization.
“This is a lot,” Allen said. “The strength of the balance sheet even after the share buyback means Inchcape has room to make more acquisitions.”
The acquisition of Australian luxury-car dealer Trivett in March, together with a “unique geographical spread,” underpinned first-half performance, the company said.
The Asia-Pacific region and emerging markets contributed 70 percent to trading profit, the company said. It’s planning to open a new Mercedes-Benz site in China and a new flagship BMW facility in Santiago in the second half of this year.
“Inchcape is engineered for sustainable earnings growth,” Chief Executive Officer Andre Lacroix said in today’s statement. “We will continue to assess value creating acquisition opportunities in high growth and high-margin areas.”
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