GOLDING’S TAKE: Inchcape - a big Brit on a world tour
Inchcape, the company that no-one has ever heard of despite being listed on the London Stock Exchange fifty years ago (and having traded for a hundred years longer than that under a variety of names) is actually very important.
Sometimes the people who run it like to call it the world's biggest vehicle distributor and retailer which is what endears them to just-auto. More recently they have worked out that Inchcape can be called Britain's most international listed retailer.
We know that it has an entrepreneurial background with a good nose for a trend. With impeccable timing in 1906 it bought a manufacturer of khaki cloth. History does not record now many opposing forces it suited and booted then, but it is certainly good at pitching rivals against one another now.
Last year it was managing to send cars to market for Mercedes, BMW, Jaguar and Lexus - the big four of global premium car brands. It also manages to pitch VW against Toyota, Audi against Honda.
It is rather an interesting new mindset for Andre Lacroix, the chief executive who has only been in his London headquarters for just over a year. Previously he had control of his very own brand rather than a business that packaged scores of brands for other people.
Most recently he was the president of Burger King International at the ghastly moment when the opposition was eating his lunch. The Big Mac was all conquering and Lacroix was left with the option of surrendering the bun fight and going for the new territory of healthy eating. Think Lettuce King with extra low-cal mayo.
The idea was unpalatable. Ultimately he put a piece of bacon and a slice of cheese in his bun with the burger, crossed his fingers and won the day. At the time you might not have thought that much of a business decision. But it was a whopper.
He then went to Euro Disney five years ago as chairman and chief executive when the debt mountain was bigger than Space Mountain. Sacre bleu.
By the time he got to Inchcape at the beginning of last year, Lacroix was a hero and people were beginning to wonder just how awful Inchcape must be to need a company doc of this calibre.
In fact, Inchcape was already restored to rude health. Peter Johnson - now chairman - had cleaned house but wanted a younger man to refurnish. It's a big ask to get the whole world to recognise a pre-eminent car distributor and retailer but that is what Lacroix is after.
Looking at the job from 50,000 feet, he sees manufacturers rushing for first mover advantage in a vast spread of emerging markets from Chile to China. Some know how to deal with the locals and depend on them to set up sales channels. Some would rather rely on an established car retailer partner to lead the way.
For Inchcape it's a complex matrix of buy or build in emerging markets, and sell and shuffle in the traditional markets to get maximum logic into the mature businesses and release funds for investment in the roaring growth areas. For Inchcape that means China, Russia, Poland, the Baltics and the Balkans. Several additional markets are being researched. The short-list is India, Brazil, South Africa, Ukraine and Turkey.
Lacroix shows a steely calm. His 2007 results were published recently and the presentation was stiff with superlatives and rigid with resolve. If he has planned to be the world's largest car retailer and distributer he is as good as there. The possibility of failure is not acknowledged.
The statement says this: "The result has been driven by investment in the high growth emerging markets and a robust business model providing the group with a unique diversity of geography, brand, channel to market and value driver. This excellent portfolio diversification gives us the flexibility to react quickly to changing market conditions and maintain our focus on the most productive sources of value relevant to each market. The fundamentals of our group are strong and our strategic direction is clear. Our focus on superior customer service and our track record of operational excellence makes us well placed to deliver continued organic growth this year."
Wow. That's strong.
What Lacroix does that would never have been done by a chief executive who had grown up in motor retail is to promise a retail experience that the customer will actually enjoy. He calls it "a long-term programme of behavioural change, which will help us differentiate Inchcape from our competitors through measurably better service quality." Well good luck. The mystery shopping agencies will be astonished to get a stand-out car retailer. In time they might be able to simplify the testimonial for Inchcape. They might be able to call it a miracle.
The key results: Sales were up 26% to GBP6.1bn. Operating profit was up 27% to GBP270.7m. Like for like operating profit - taking out the acquisitions - increased 6.6%. The operating margin in distribution was 8.2% and 2.5% in retail making an aggregate of 4.8%. The UK was 24% of profit. It was the sixth consecutive year of growth.
See also: UK: Inchcape profit up 9.9% in 2007