Inchcape, the global automotive distribution group, fell 9% to 631p after a sharp deterioration in its Australian business forced the company to cut its full-year margin guidance, ending hopes of a second-half recovery.
The group now expects a full-year EBIT margin of 5.5%, down from previous guidance of around 6%, with the shortfall driven by a volume collapse at its Subaru distribution operation in Australia, where volumes fell 50% against a market that grew 1%.
Management cited deteriorating competitiveness of the OEM partner as the cause.
Third-quarter organic sales growth came in at just 1%, sharply below the 5% delivered in the second quarter and well short of analyst expectations of around 6% for the second half.
The comparison period was the toughest of the year, with 8% growth in the prior year, but the miss was still significant given the scale of the Australia shortfall.
Elsewhere, trading was more encouraging. Americas volumes grew 10%, though this lagged the market's 24% rise due to some supply chain disruptions, while Europe posted organic volume growth of 16%, well ahead of a market that grew 2%.
The company said earnings per share growth of around 10% was still expected for the full year, supported by one-off tax benefits and share buybacks.
Panmure Liberum, which has a 'hold' rating and a target price of 855p, said it expected the EBIT cut to exceed 10% and warned the problems in Australia were likely to carry over into 2027, given the time needed to address the issues.
It added that at a 2027 price-to-earnings multiple of just 6.7 times, further share price weakness was still likely on the day.
Peel Hunt, which retains a 'buy' rating and a 1,050p target, cut its profit before tax estimates for 2026, 2027 and 2028 by around 8%, and said the shares, now trading at 7.7 times revised 2027 earnings and 4 times enterprise value to EBITDA, appeared compelling.
It argued the Australia problem was specific to one OEM's product line-up rather than a structural flaw in the business model.
