Inchcape, the international car distributor, will book an exceptional profit of pounds 29m following the sale of its Quarry Bay site in Hong Kong to Pacific Century Group for pounds 56.25m.
The move is the latest in a series of asset disposals by the distressed company, which has recently sounded profit warnings and been forced to make write-offs of more than pounds 100m due to the declining competitiveness of Japanese car manufacturers worldwide.
The site, owned by Inchcape subsidiary Crown Motors, the Hong Kong-based distributor of Toyota, presently houses Crown Motors' head office, one of six Hong Kong service centres and one of eight area showrooms.
Pacific Century plans to demolish the 12-floor building on the site to make way for a new commercial development.
During the year, Inchcape said the Crown Motors facilities would be moved to new, purpose-built headquarters in Hong Kong.
As part of the sale agreement, Inchcape has already received 15 per cent of the purchase price, with the balance due at the end of the month.
The proceeds will be used to develop Crown Motors' businesses and to reduce debt.
City analysts have pruned back profit forecasts for 1996 to pounds 160-pounds 170m, but some expect Inchcape to recover within the next two years. The poor performance has been directly related to its over-dependence on sales of Japanese cars, which have suffered as a result of the rising yen. The company hopes to build up its car components and accessories divisions and to develop distribution agreements with non-Japanese car manufacturers. It is also planning to float its insurance broking business, Bain Hogg.
A turnaround would mark a break with recent trends, as Inchcape has underperformed the UK market by 60 per cent over the past two years. The share price and profits have taken such a hammering it was removed from the FT-SE 100 last month. Sir Colin Marshall, formerly chief executive of BA, was appointed non-executive chairman from 1 January.Reuse content