LONDON, (Reuters) -- British car dealer Inchcape Plc posted higher first-half profits on Monday and announced an acquisition drive to take advantage of new European laws that relax the grip of car manufacturers on distributors.
"We see a quite rapid consolidation and with the strength of balance sheet that we've got we're going to be in a strong position to acquire where we see opportunities," Chief Executive Peter Johnson told Reuters.
Underlining its strategy, Inchcape said it had bought six BMW dealerships to make it the German carmaker's second-biggest retailer in Britain.
The European Union revised its Block Exemption laws last October in a bid to narrow the gap in car prices across its 15 member states. The new rules give more freedom to dealers, by allowing them for example to sell more than one brand in the same showroom.
Inchcape, which sells nearly a fifth of the world's Maserati and Ferrari luxury sports cars, said profit before tax, goodwill and exceptional items jumped 16.5 percent to 66.4 million pounds ($106.5 million) in the six months to June 30, beating analysts' consensus forecast of 64.1 million.
The interim dividend rose 20 percent to 12 pence a share.
As well as the new European rules, Inchcape's shares have been underpinned by continued strong demand for cars in Britain in the teeth of a general slowdown in consumer spending growth.
Johnson said low borrowing costs and a 12-15 percent drop in car prices were supporting the market in Britain, and expected this situation to continue for the rest of 2003.
Inchcape is also looking to expand outside Europe, particularly into China, and will not return cash to shareholders while there are good investment opportunities, Johnson said in a telephone interview.
The firm, which also sells cars made by Toyota, Mercedes-Benz and Ford, said profits rose sharply in Singapore and also climbed in Greece and Australia.
This more than offset a drop in Hong Kong markets during the outbreak of the Severe Acute Respiratory Syndrome (SARS) virus.