Inchcape plc (INCH) Earnings Call Transcript & Summary

Hello and welcome to Inchcape Q1 results conference call. Please note, this call is being recorded. [Operator Instructions] I will now hand over to your host, Duncan Tait, CEO of Inchcape to begin today's conference. Thank you.

Thank you, Susan. Good morning, everyone, and thank you for joining us. With me on the call is our Acting CFO, Adrian Lewis; and our Head of Investor Relations, Raghav Gupta. I will begin by commenting on the group's performance and outlook before handing over to Adrian, who will give more detail. We'll then take your questions. So as detailed in this morning's announcement, the group's Q1 performance has been excellent with continued strong business momentum reflected in our strategic, operational and financial progress. In the first quarter, we reported revenue of GBP 2.7 billion, with growth of 50% on a reported basis, reflecting the benefit of M&A, including Derco. On an organic basis, revenue grew 13% with a continuation of the trends experienced at the end of last year and growth across all regions. The M&A contribution was primarily driven by the consolidation of Derco, which has made an encouraging start in its first quarter within the Inchcape Group. While our other recent acquisitions, Morrico in Guam, Simpsons Motors in the Caribbean and Ditec in Chile, all continued to perform well. On Derco, I am especially pleased with the progress to date in integrating the business into our group. And we remain firmly on track with our strategic and financial plans. We reiterated our confidence in our margin expectations for Derco at our full year results, and we stand by our expectation of delivering operating margin towards the top end of the 5% to 7% range, but it's typical for a distribution business before the impact of synergies. Adrian will touch on inventory shortly. But from my perspective, the team has done a great job in aligning inventory management practices in Derco, with those employed across Inchcape. I was in the Americas visiting the operations a few weeks ago, and I'm confident about the working capital opportunities we have quantified for 2023. Finally, in relation to EPS accretion from the deal, we continue to expect at least 15% accretion in 2023 and at least 20% in 2024. This reflects the additional profit contribution and the dilution from the Inchcape shares issued to Derco's former owners. Over the past few years, we have continued to shift the group's portfolio towards distribution. And during the first quarter, we have further extended our distribution footprint. I'm delighted with the speed at which our team has expanded our presence in the APAC region, firstly, with the agreement to acquire CATS, giving us access to the Philippines, adding another exciting and high-growth market to the group. And more recently, the agreements reached with Mercedes-Benz for us to purchase their operations in Indonesia. Our business, the OEM has been operating since 1970 and has now decided to hand over to Inchcape to manage and drive further growth. The two acquisitions will collectively add over GBP 320 million of annualized revenue, and we anticipate completion during the second half of 2023. We were also pleased to be appointed the distributor of Tata commercial vehicles in Thailand, broadening our footprint in a market where we already distribute JLR. This expansion is a great example of our accelerated strategy in action, delivering on the group's growth ambitions. The combination of our broad market footprint, strong OEM relationships, our digital and data capabilities and our robust financial position continues to make Inchcape the natural consolidator in a highly fragmented industry. During the quarter, we continued to progress with our ambition to capture more of the vehicles' lifetime value by bravoauto and our digital parts platform. In these early days, our teams are focused on execution, and we are pleased with the progress so far. Now moving to outlook. Following an excellent start to 2023 and based on prevailing market conditions, we expect to make strategic, operational and financial progress, underpinned by the integration of Derco, with full year results expected to be in line with published market consensus. Adrian, over to you.

Thank you, Duncan, and good morning, everyone. In Q1, the group generated revenues of GBP 2.7 billion. On an organic basis, revenue grew 13% with growth across all regions. Duncan referenced the significant M&A contribution driven primarily by Derco and currency also provided a small tailwind. Overall, on a reported basis, revenue increased by 50% year-over-year. So looking at our two segments. In distribution, revenue increased 70%, and the M&A impact largely reflects the consolidation of Derco, although Simpsons Motors and Ditec both acquired in Q2 '22 also supported growth. On an organic basis, distribution revenue increased 15% supported by new vehicle supply and our aftermarket business. In retail, revenue grew 8% with performance also supported by improved supply. The growth rate was stronger on an underlying basis with the headline impact of the agency of certain brands from start Now let me give you a little bit more detail. Starting with the Americas, we saw good performance despite several markets lapping challenging comparators, but with share gains for several brands that the supply is constrained Elsewhere, aftermarket continued to grow, and the bravoauto rollout in the second half of 2022 drove growth in used vehicle revenue in Q1. Moving to APAC performance in both Singapore and Hong Kong was in line with our plan and an improvement is expected in late 2023. The [ re-enactment ] Of the Board of China has led to increased order books in Hong Kong. Other markets in Asia continue to see the strong trading with a continuation of its growth cap. In Australasia, we continue to see strong momentum, underpinned by improving vehicle supply and a long order book, and our bravoauto business is gaining traction. In Europe and Africa. In Europe, we saw double-digit growth in both new and used vehicles, supported by better vehicle supplier with a particularly strong performance in Romania, Greece and Bulgaria. From what is early days of bravoauto, the business is progressing well. And in Africa, our performance was underpinned by robust growth in the aftermarket business. But before we move to retail, I'll give you [Technical Difficulty] third quarter profit performance was in line with our expectations. In terms of market performance, whilst new vehicle volumes in both Chile and [Technical Difficulty] declined in following a very strong [Technical Difficulty] growth. we saw strong performance on certain across by Derco and the offering improved supply. And this is offset by [Technical Difficulty] following a very strong [Technical Difficulty] And as part of we prioritized management practices with and we'll be taking [Technical Difficulty] reorders, the have been higher than as we sat down to year results, we have identified this as a working capital opportunity that we will deliver on [Technical Difficulty] and it will be partially offset by the working capital value or Overall, the progress we made [Technical Difficulty] Turning to Retail. Revenue grew 8% year-over-year on organic basis. The underlying much stronger after adjusting to the impact at the adoption. The [Technical Difficulty] business model we have in performance over [Technical Difficulty] higher business support a more established So overall [Technical Difficulty] a strong Q1 performance demonstrating continued business momentum. Duncan, back to you.

Thank you, Adrian. Inchcape is a business with great momentum and an exciting future with a clear and proven strategy, we are well positioned to capitalize on further opportunities for organic growth and market consolidation. And I am confident we'll continue to deliver sustainable growth and long-term value for all our stakeholders. Adrian and I are now ready to take your questions. Susan, over to you.

[Operator Instructions] The first question comes from the line of Andrew Nussey from Peel Hunt.

Questions from me, please. Really a more sort of the medium term outlook. I guess, first of all, in terms of the Americas and specifically Chile and Colombia, where obviously you referenced sort of weaker market volumes in the first quarter, really just looking Duncan can pass a little bit more comfort around your medium-term thoughts on those markets. And if they have changed at all given the current market dynamics. And then secondly, in terms of sort of distribution excellence, as you're sort of beginning to see improved vehicle supply, maybe some better insight on the sort of order book dynamics, whether it's sort of your confidence again in that sort of medium-term objective of high single-digit organic sort of profit growth over the medium term, please?

Right, okay. Thank you for those two questions. Adrian will take the first one, and I'll come back in for a view on our order book in the medium term.

Yes. Thank you, Andrew. So question about sort of the attractiveness of the markets that we are increasingly exposed to with the acquisition of Derco. The Latin American business across Chile, Colombia, Peru, Bolivia, Costa Rica, Panama, they all looked very strategically attractive. They both have -- they all have the characteristics of GDP growth, low motorization rates, which means the opportunity to grow the number of vehicles in the market over time is very attractive. Whilst we like the vehicle business, but we also sell parts and servicing facilities and we have a VLS vehicle life cycle services strategy, which will increase our exposure to used car business. So all of those streams of business remain attractive to us. So I don't think we've seen anything that changes our investment thesis behind Derco from a market perspective, they remain very attractive over time. If you take Chile as an example, it's a 400,000 car market, roughly speaking. If you look at the local sort of automotive intelligence agency the [ ANI ], they talk to a 500,000 vehicle market towards the end of the decade, and that's replicated across the as well when you go through the other markets. Of course, it's not going to be a straight line. And you mentioned some of the short-term market dynamics, particularly in Chile and Colombia. Chile was 17% down in Q1. You've got to remember we are lapping a really strong Q1 in 2022, fiscal stimulus in Chile and also a bit of a post-COVID tailwind giving the market a very strong comparator. The sort of the external market, and we agree with them looks to see the full yet steady market somewhere towards minus 10%. So minus 17% will be the low point, and we expect a stronger growth rate as we go through the course of the year. So look, to summarize, yes, with the investment thesis from a market perspective. [Technical Difficulty]

Please standby, while we connect your speaker. Please stay connected while we rejoin your speakers.

Hi Susan, can you hear me? Hi team, sorry this is...

Yes, can hear you. you can talk now. You can carry on.

Thank you, Susan. There seems to have been a technical issue. We will -- understand were some issues with hearing part of Adrian's script. So we'll just restart from Adrian's script, if that's okay, and then close off -- sorry, and then open up for Q&A.

Hi, everyone. Apologies. So look, I'll start from the top and just run through. Q1, the group generated revenue of GBP 2.7 billion. On an organic basis, revenue grew 13% with growth across all regions. Duncan referenced the significant M&A contributions driven primarily by Derco and currency also provided a small tailwind. Overall, on a reported basis, revenue increased over 50% year-over-year. Looking at our two segments in distribution. Revenue increased 70%. The M&A impact largely reflects the consolidation of Derco, although Simpsons Motors and Ditec both acquired in Q2 '22 also supported growth. On an organic basis, distribution revenue increased 15%, supported by improving new vehicle supply and aftermarket growth. In retail, revenue grew by 8%, with performance also supported by improved supply. The growth rate was stronger on an underlying basis with the headline impacted by the switch to agency to certain brands at the start of '23. Now let me provide you with some further detail. Starting with the Americas, we saw good performance despite several markets lapping challenging comparators were share gains for several brands that were supply constrained during '22. And elsewhere, the aftermarket continued to grow with the bravoauto rollout in the second half of '22, driving growth in used vehicle revenue in Q1. Moving to APAC. Performance in both Singapore and Hong Kong was in line with our plan with an improvement expected in late '23. The reopening of the border with China has yet to increase order books in Hong Kong. Our other markets in Asia continue to see strong trading with a continuation of the trends seen over recent times. In Australasia, we continue to see a strong momentum underpinned by improving vehicle supply and a long order book and our bravoauto business is gaining traction. In Europe and Africa. In Europe, we saw double-digit growth in both new and used vehicles supported by better vehicle supply and a particularly strong performance from the Romania, Greece and Bulgaria. And whilst it's early days survival also the business is progressing well. In Africa, our performance is underpinned by a robust aftermarket. But before we move to retail, I'll provide you with an update Derco. Derco's first quarter revenue and profit performance was in line with our expectations. In terms of market performance, the new vehicle volumes in both Chile and Colombia declined versus the prior year following a strong '22. Both Peru and Bolivia saw strong growth. In terms of brands, we saw strong performance for certain brands across both Derco and [ called ] Inchcape following improved supply and this was offset by normalizing market share elsewhere, following a very strong performance in '21 and '22. The aftermarket business was also performing well. As part of our integration plan, we have prioritized the alignment of our inventory management practices with those employed across Inchcape, and we've been working in collaboration with our OEM partners to revise down previously agreed orders for vehicles and parts, and I am pleased with the progress the team has made so far. Our completions Derco's inventory balance was GBP 200 million higher than we had anticipated. And as we have said at our full year results, we have identified this as a working capital opportunity that we will deliver on through 2023. This will be partially offset by working capital outflow across the investment group as our private business normalizes. Overall, as Duncan said, we are pleased with the progress we have made with the integration and performance today. Moving to Retail. Revenue grew 8% year-over-year on an organic basis with the underlying performance much stronger after the adjustments for the impact of the agency model. That change in business model will have a negligible impact on profits. And as a reminder, the shift to the agency model will not impact our distribution business. Performance has been driven by growth across all those revenue streams with higher new and used vehicle volumes and after sales growth. New vehicles underpinned by higher volumes, used vehicle supported by a more established bravoauto business. So overall, the group has made an excellent start to '23 with a strong Q1 performance, demonstrating continued business momentum. Duncan, back to you.

Thank you, Adrian. So before we open for questions, Inchcape is a business with great momentum and an exciting future. With a clear and proven strategy, we are well positioned to capitalize on further opportunities for organic growth and market consolidation. And I am confident we will continue to deliver sustainable growth and long-term value for all our stakeholders. Adrian and I are now ready to take your questions. Susan, over to you.

The next question comes from the line of Arthur Truslove.

Three from me, if I may. So first question was just on the aftermarket in Chile and obviously, Derco in particular. There's obviously a number of strong years for new car sales in Chile. And should we think of this as being a sort of positive driver for aftermarket performance over time and if you could comment on how that was in the first quarter for Derco. And then within that also, it is reasonable to think that the aftermarket proportion of Derco is comparable with the rest of the group and second question, I think it's Adrian, if I understood you correctly, your -- you said that you're sort of reducing orders into Derco as a result of having taken on higher inventory. Just wondered if you could sort of provide a bit more detail on how that process works and how it's sort of going. And then also on Derco, really good to see that you reiterated your guide this year and next. I just wondered if you could give us an idea of the sort of new car volume or revenue perspective, whatever you think is most meaningful. The sort of level that would become challenging for the guidance that you've issued for this year.

Very good. Thank you very much, Arthur. I think those questions are all heading Adrian's way, and I'll add a little bit of value towards the end. So Adrian, over to you, please.

Yes. Arthur, three good questions. So let me tackle the aftermarket one first. I think it's probably fair to say that the Derco business has a good exposure to the aftermarket business, probably a greater degree that we would see in the normal in our core business. There's a number of business units within the Derco acquisition that are slightly different or expand our exposure to the broader aftermarket business with parts particularly. And so we're very excited about that. The broader Chilean market, I don't think one of the questions you've had earlier the Chilean market is going to grow from around 400,000 new cars to around 500,000 new cars if you take the external market forecast for that region. With that, we'll -- the car park within the market will grow. And with that, we'll bring a tailwind to our after sales and our broader VLS business as well. So we're very excited about that. Proportionately, I think you can think about it slightly stronger towards our broader business -- than the broader business. Your question around inventory and orders and reducing orders with our OEMs and how that process works. As I said in our statements, we have prioritized the alignment of our practices around sales and operational planning as one of the first things we've done as part of the integration. And I'm pleased with firstly, both the mindset and change that the team has been through, but also the reaction and response to our OEMs. One of the things we pride ourselves on is the way we use data to inform our decision-making. And when you work with the OEMs with a database conversation, it becomes a very positive and constructive conversations. We're really happy with that. What we also said at the full year results that we would work through our -- the some GBP 200 million of inventory that would be higher than an anticipated or expected level of working capital across 2023, and we've reiterated that today. We are not taking short-term decisions, it's still with the market in order to solve for that challenge. We're working across 2023, and we're confident of the progress we're making, and you'll see more as we published our more detailed numbers in July. In terms of Derco and new volumes, I think first thing to say is it's a full market business, but with Chile and Colombia have been down as we had expected them today, but with growth [indiscernible] and Peru and Bolivia. Chile and in on itself is down about 17% in the first quarter. You've got to remember that we are lapping some pretty strong comps in the first quarter of 2022 just got stimulus post-COVID bounce all created quite a tough comparator. The external market commentary is talking about minus 10% for Chile. So we expect a better performance from a year-on-year perspective and in absolute terms in the second -- as we go through the year and into the second half. I don't think if you stand back any of the short-term kind of market changes that we've seen all the market positions we've seen changes our investment thesis around, okay, still very excited about the GDP opportunity and the low vitalization rates and the growth over time that all 4 markets offer for us. So we're happy with the performance to date and the midterm prospects as well. .

Arthur, was that useful?

The next question comes from the line of Andrew Nussey.

I think you answered my first question earlier. The second question if you remember, was around distribution excellence and sort of the medium-term profit growth ambitions. And just whether now you're beginning to see some normalization in vehicle supply as you look across sort of the order books across the region, is just your confidence in delivering that sort of organic aspiration over the medium term?

Okay. Yes. Hi again, Andrew -- so look, couple of things. Let's just -- we're standing back for a moment on thinking about what we committed at the Capital Markets Day, which we stand by. So mid-high single-digit profit CAGR in our distribution business plus M&A plus VLS at GBP 50 million per annum incremental profit contribution towards the end of the planning period. I think our Q1 was in terms of revenue growth reinforce some of that proposition that we've made in the way to think of the growth of our business. And also in terms of M&A, since the Capital Markets Day, let's not forget, we've completed on the Morrico deal in Guam, our Simpsons business in the Caribbean, Ditec in Chile and Derco, with two more acquisitions announced in the first quarter and more contract wins. It's not just Derco, but it's BYD, it's Great Wall or it's Chile and others. Now in terms of your specific question, Andrew, and in terms of how we're seeing all the banks and market performance, it's worth going through the regions one by one to give you a little bit more color. But the Americas, 10 of our 12 markets, we're seeing high single-digit, low double-digit order intake. Those markets continue to perform really well for us. And we're seeing some supply come back, some brands that were supply constrained over the last year or so. And as Adrian said, in Chile, we are seeing better news in the second half according to our intelligence on the ground. Africa is steady as goes. I have no concern about that Africa business. Then into Europe, and I don't think this should be a big surprise for us is that we are seeing lower levels of order intake in Europe. But what I would say is the order bank in Europe from hitting an all-time high in the second half of 2022 is down a little bit. And as of now, it's down about 10%. So it's just the slow unwinding of the order bank, and we see that order bank taking us to the vast majority of 2023 and we are actually, as we review the Europe business, we're already taking orders into 2024 in the business now. And in APAC, look, let's flip it into three. The Asia developing markets Guam, Brunei, Thailand, Indonesia, we've just announced the entry in the Philippines. Those businesses remain pretty hot for us, good order intake, good growth year-over-year. And frankly, if we have more vehicles, we'd be even happier. Hong Kong and Singapore showing signs of recovery. I wouldn't put anything in a model for this year, but I think 2024. And finally, in terms of Australasia, we're seeing strong demand, good order intake, good growth in that business, and our supply is coming back a little stronger than we expected. So by and large, Andrew, the -- if I think about our medium-term guidance, we remain committed to that. And if you look at how the business is performing in the near term, I think that's supportive of what we've committed to. Hope that gives you a little bit more color.

The next question comes from the line of George Pilakoutas of Numis.

And maybe just want one more on kind of the Americas demand. I guess, really just the point that the monthly rate has been very volatile. And so I was just wondering if there was anything that you think is particularly driving that? And about when we look at the last quarter in Chile, January was down 20% versus 2019, March is plus 20%. What is kind of a truer sense for kind of what the underlying demand? Is it kind of somewhere in the middle or somewhere towards the lower end or the upper end. So anything you can share there? And then secondly, on the Derco inventory, I was just wondering if you could talk a little bit more around what that inventory is? Is it kind of use? Is there any particular brands? Just kind of give a bit more of a sense of how you're going to manage through that? Third one is on M&A and just how you think around the group's balance sheet position versus doing further M&A, you didn't stop in the first quarter, but there must be a point where you feel like you need to prove things. And so if that is the case, what needs to be proved -- is it kind of going towards the end of this year, where leverage is back into kind of a more comfortable position? Or do you see any kind of restrictions to M&A? And then the final one, I don't even think I can blame the line cutting out. Can I just confirm some comments at the beginning that you said that the data consideration had been paid? So hopefully, that's a very quick one.

Yes. George, can you just give me a question 4 again, please, just so I make sure we got that clearly.

That one is under Derco consideration being paid.

Okay. Fine. I'll cover how we're seeing demand specifically in Chile, and I'll hand the inventory and M&A relative to balance sheet and question for to Adrian. So Q1 Chile dropped, the market dropped 17% year-over-year. That was slightly better than we expected because we were thinking more of a 20% drop in the first quarter, so slightly better. Commercial vehicles showed more resilience than passenger vehicles. And of course, we have exposure to machinery, construction, commercial vehicles and for passenger vehicles in that Chile market. And we did see supply coming back from some of the OEMs, such as the Japanese OEMs that had struggled more in previous quarters. Now in terms of how we -- how to think of that Chile market for the rest of the year. So from the local intelligence we have from the agency on the ground -- the motoring agency on the ground, is that Q1 is most likely to be the trough of the year, George. The indication overall is what is year-over-year for the drop to be more like 10%. And for the second half, you start to get back to growth. Now it's a bit early for us to forecast according to that. But that is the information that we're getting from our team on the ground, but also for the independent motoring organization called [ AMAC ] in Chile. So that's the overall picture with what we are seeing so far, as ever in this world, unlikely to be in a straight line, but the second half looks way more positive than Q1, and we think Q1 is the trough. Adrian, over to you, the question

Sure. I covered Derco inventory in the first instance. I think your question was give us -- give me a sense of brands and new versus used old parts. So it wouldn't be a surprise. So we need to say that the inventory is largely a new vehicle inventory base. It's not just the Chile-based inventory. Of course, we have good-sized businesses in all markets. When you go back and think about where the inventory came from, we saw strong supply in 2022, particularly from the Chinese brands, and we saw a recovery in supply from some of the other brands that Derco represents. So what's been really encouraging for us is that when we've gone back to all of the [ OEM's ] across the course of the first quarter of this year and worked with them using our data and our -- the tools that we have around -- and our predictions around demand to tender that supply across the next 6 to 9 months. There's been an incredibly supportive response. And so we're very confident that we're going to make progress. We said we would not take short-term actions to correct because that creates market distortion. That's what we're doing, and we stand by the GBP 200 million working capital inflows that will arise as we normalize the working capital cycle in Derco by the end of the year. Your second question was M&A balance sheet. What do we need to see before we carry on. First, we stand is going to -- is a highly cash-generative group. We will continue to be highly cash generative, and we have a very, very active and full M&A pipeline. The two acquisitions that we have announced this year in the first quarter of this year in the Philippines and in Indonesia, it reflects that pipeline, it reflects our deepening relationships with our OEM partners and the opportunity that, that presents itself. We also said, particularly with the Indonesia deal, but we expect to conclude the year broadly with a leverage position that is consistent with where we started the year at around 0.6x, with the underlying free cash flow generation supporting the balance payments to the Derco, and to Del Rio family and also the acquisitions that we have announced to date, and we stand by that today. So 0.6x is in a really strong position. We have a full M&A pipeline, basically in the bolts-on space. So we're continuing to pursue that. We have a capital allocation policy that captures out a 1x EBITDA, and we're not moving to get stuck at this stage. So we've still got headroom to go as that pipeline comes through. And then the final point, which I've sort of touched on Derco consideration. What we said was that we mostly across half line apart and a little bit across the second half. So we are on track with that.

Thanks, Adrian. And George, let's not forget not just about M&A in terms of how we grow this business. There are also contract wins, of which the Tata Motors is a good example, and the APAC team have not just been working on building the M&A pipeline, but also on contract wins. So George, how do we get on answering your questions?

Yes, I mean that's great. Thanks so much guys.

[Operator Instructions] The next question comes from the line of Akshat Kacker.

Just one clarification, please. On the Americas business in Q1, could you just give us more detail in terms of the overall volume and revenue development in the region organically, please?

I'll take that one. So yes, so our Americas business, as you say, has a mix of volume and price. We are exposed to Chile, particularly. So the volume position followed that -- following particularly that market. I think you should also think about a stronger and growing aftersales business and increasing exposure to a strong used car business. But also, what we've seen during the course of the first quarter this year has been skewed towards higher average selling prices. So across our Americas business, our revenue performance outperformed the volume that we see across the [ pitch ] and as I said in my in my comments earlier, we've seen share gains in some brands, where we're lapping supply constraints, and we've seen some normalization of share, where brands were doing really, really well in the prior periods. So it's been a mixture with the revenue overall outperforming the volume.

I was saying in terms of quantification, is it possible to talk about revenue development in the region.

We don't disclose volume by regions. I'll give you more detail around our segmental performance at the half, but we don't disclose volumes by region.

The next question comes from the line of James Zaremba of Barclays.

I had a similar question in terms of kind of mix of price and volume, but I guess at the group level, there's been quite a lot of noise in the industry about price cuts in some markets. Is the expectation for the full year still for average selling prices to be up. And then I think at the results, you basically told the market was maybe 10% below your normal levels, we've got kind of mid-single-digit volume this year. So I guess you've got another year of recovery in 2024. Is that sort of the right way to think about the medium term.

I'll take the short-term points and Duncan if you want to talk about midterm. So I think the mid-single-digit volume growth is still how we see the overall market supply has been recovering, and is broadly where we it is improving. And if you look across the industry, we are seeing an uptick in vehicle availability, which is good and certainly our performance in quarter 1 reflected that across the group. What we also saw in Q1 that you've seen the organic growth of 15% in the core business was the follow-on effect of inflation from the second half of last year, where we've seen prices higher than we saw in the first quarter of last year. So our 15% is a combination of that mid-single-digit volume and price. As we go through the year, as you saw in the second half of last year, a much stronger top line than in the first half because of some of those inflationary factors and acquisitions. We do expect that growth rate to normalize back towards the volume number with a small price tailwind. So I think our guidance at the year-end or not a month ago, that's how we still see the full year, pleased with Q1, a bit of price tailwind helping as a result of the second half last year inflation. Duncan, want to perhaps comment on midterm?

Sure. Thank you, Adrian. So in terms in terms of 2024, let's talk about supply first. So I think as an industry, supply, I think, will continue to normalize during '24. The jury is still out as to whether that's a normalization in first or second half, but it now looks much more like a '24 normalization of supply. I would point out a few things about the Inchcape markets. Most of our markets remain below the 2019 levels. I would also say that the age of the car park in many of our markets has aged quite significantly over the last few years. And you know we think there's been about a 30 million vehicle gap generated by lack of supply over the last 3, 4 or so years, which I think are positive for the group overall. Then a few more detailed comments about it. Let's not forget, Hong Kong and Singapore are way, way off a reasonable peak, not even at peak, peak that you would have seen for those two markets. We are seeing green shoots of recovery in Hong Kong. In fact, we're building an order bank in Hong Kong and the Great Wall order brands, we've pretty much sold out our business plan for the whole year, but have not yet taken delivery of vehicles. And in Singapore, we can see that COE cycle start to tick upwards in 2024 -- from 2024 onwards. And then we continue to have an order bank in Europe. We have an order bank in Australasia. And our Americas markets, I think, will continue to give order growth into 2024, and we should see, at that point, a more of a normalization in terms of the growth of our business in Chile and also in Colombia. So supply -- in summary, supply coming back to some type of normalization, our markets are way behind. Our order bank -- sorry, the car park is aged, and we have some markets that are tailwinds to the group as we get into 2024. James, I hope that's helpful. .

That was very helpful. Just one clarification from Adrian maybe. We know you're right in reading that and prices have still increased marginally year-on-year versus the level in the second half. So I guess there's a big annualization effect, but there's also been an actual net increase as well.

I think what you're seeing in Q1 is the consequences of the second half price movements. A second round of inflation to come, we'll only really start to see as we get it -- as we start to get through the balance of the year. I think it's probably getting a less pressure on input prices from our OEM partners as we go into new model years. And so we don't see the same levels of price inflation that we saw in the in '22.

James, thanks very much indeed. So thank you very much, everybody, for your questions and for joining us on the call this morning. I hope you share our excitement about Inchcape continued strategic progress and the growth opportunities we are intent on capturing. Look forward to updating you further at our interims on the 27th of July. And in the meantime, please get in touch with Raghav if you'd like to follow up on anything. Thank you.