Marshall clears the decks at Inchcape

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The Independent Online
Inchcape, the world's largest motor distributor, yesterday attempted to draw a line under its troubled past by slashing the dividend, removing its chief executive and announcing huge write-offs and the disposal of peripheral businesses.

Sir Colin Marshall, the chairman, who is seen as having driven the shake- up at the group, said he was cautiously optimistic that 1996 as a whole should show an upturn in the group's fortunes after three years when a soaring yen and tough markets have played havoc with sales of the group's mainly Japanese-built cars. Inchcape would focus on becoming an international distribution group, he added.

The market, already braced for bad news, breathed a huge sigh of relief that the bloodbath was not worse and the shares rose 10p to 272p.

The final dividend is cut from 9p to 4p, reducing the total for the year from 15p to 10p. Sir Colin said this level was deemed appropriate, given the sharp fall in profits last year from pounds 228m to pounds 17.4m. The aim was for earnings per share to cover the dividend twice over, he said. Last year, earnings slumped from 26.4p to 14p, even before a pounds 65.2m charge.

Charles Mackay, chief executive for the past six years, steps down with immediate effect, to be replaced by Philip Cushing, formerly managing director of the group. Mr Mackay will remain with the group as deputy chairman until the end of June to oversee the hand-over of responsibilities. Currently on a two-year rolling contract and paid pounds 380,000 in 1995, he is expected to pick up around pounds 800,000 on his departure, which will include no bonus for last year. Mr Cushing's salary of pounds 300,000 last year will go up, but not to the former level of Mr Mackay's.

Sir Colin said the decision to reduce the number of businesses "threw a spotlight on the top-heavy position at senior management level itself. As a consequence of that, I reached agreement with Charles Mackay that he step down as chief executive."

Inchcape said it would sell its testing services business, one of the world's largest laboratory testing operations, and is considering the demerger of Bain Hogg, the UK's largest retail insurance broker. Last year, the group declared its intention of floating Bain Hogg after talks to sell the business apparently broke down. The group has already received expressions of interest in the testing business.

No details of the disposals were given yesterday, other than that they would take place in 1996, but brokers were pencilling in a value roughly equal to last year's turnover of pounds 235m for testing services and up to pounds 300m for the insurance broker.

Profits in the main motors business, which includes one of the largest UK motor retailers, crashed from pounds 148m to pounds 97.4m. The main problem was in the import and distribution operation, where heavy marketing expenditure was required to stem the loss of market share by the group's Japanese marques. Mr Cushing said UK volumes had been at record levels and Greece was ahead.

Investment column, page 18