UK-based global vehicle distributor and dealer Inchcape Group on Friday issued a profits warning, saying it expects current trading conditions to remain "difficult for the rest of 2008 and throughout 2009.

"As a consequence we expect our underlying results for 2008 to be below consensus and for 2009 to be significantly below our previous expectations," Inchcape said in a statement to the London Stock Exchange.

Group sales for the nine months to 30 September were up 6.7% in sterling terms and in line with the same period last year in constant currency while like-for-like group sales slipped 1%. Group operating margin was in line with last year at 4.8%.

Underlying pre-tax profit for the nine months was up 2.2% in sterling terms and down 7% in constant currency compared to the same period last year, Inchcape said.

The company said events in financial markets across the world in recent weeks had reduced consumer confidence "substantially" leading to trading conditions here in the UK deteriorating "significantly" and weakening in a number of other markets.

Inchcape said it was taking "strong actions to reduce our cost base to a level appropriate to current market conditions" in all its major markets, with the main impact in the UK.

Restructuring and associated asset write-downs are expected to be approximately GBP55m, of which £27m will be a cash cost, booked in the remainder of 2008 and the first half of 2009.

"As a result of this restructuring the annual cost reduction is expected to be approximately GBP50m," Inchcape said.

The group will also books a quarter four exceptional charge of GBP20m to reduce the capitalised goodwill in its Latvia business due to the continued weakness of that market.

Inchcape said it expected the UK trading environment to remain weak in 2009 while European trading conditions were becoming "more difficult" though market share and leadership had been maintained in Greece.

It also expects Hong Kong and Singapore to slow while Australia is now flat year on year for the nine months, though Inchcape's owm market share has improved.

"If the Japanese yen remains strong against the Australian dollar, it will only impact our business from the last four months of 2009 as we have hedges in place until then," the statement said.

Inchcape described the situation in its emerging markets as "mixed" with the Balkans weakening in the third quarter while the Baltic states of Latvia and Estonia continue to be "significantly below last year's levels".

The Russian market for international brands however continued to grow strongly, at 23% for the third quarter and 40% year to date.

Inchcape insisted its financial position remains strong with net debt at 30 September of GBP570m in line with expectations for a 'plate change' and facilities in place for the medium-term.

"We will continue to focus on market share improvement and on parts and service, which account for approximately 50% of trading profit," Inchcape said.

"We are undertaking a substantial overhead reduction programme to right-size the business in the light of current market conditions. Outperforming the industry and reducing our cost base will put the group in a strong position when markets recover.

Group CEO André Lacroix said: "The global financial crisis and its consequence on the real economy is clearly affecting consumer confidence mainly in the mature markets and this is having an impact on the purchase of big ticket items. We are not immune from the current industry slowdown and we are taking appropriate actions to right-size our cost base.

"Inchcape will continue to benefit from its unique business model as we maintain our strategic focus on customer service and growth in the emerging markets."