DOW JONES NEWSWIRES
Penske Automotive Group Inc.'s (PAG) second-quarter income
dropped 63% on continued weak sales, but earnings beat
expectations.
Auto dealerships have experienced smaller sales declines in
recent months, suggesting the epic slump related to reduced
consumer spending may be nearing a bottom. Meanwhile, price
increases - reflecting auto makers' efforts to make a profit on
lower overall sales volumes - have raised fears that the recovery
could become stunted.
The company - which is run by motor-racing mogul Roger Penske -
posted income of $14.1 million, or 15 cents a share, down from
$37.8 million, or 40 cents a share, a year earlier. The latest
results included a 7-cent loss from discontinued operations.
Revenue decreased 30% to $2.32 billion.
Analysts polled by Thomson Reuters expected earnings of 15 cents
on revenue of $2.36 billion.
Gross margin rose to 17% from 14.9%.
New-vehicle sales slumped 37%, while used-vehicle sales fell
19%. The company said total retail revenue fell 28% amid a 31% drop
in same-store sales.
Inventories were down 20% so far this year.
Roger Penske said performance improved over the first quarter.
He added the company's cost-cutting plan helped it remain
profitable despite falling sales, and said he is encouraged that
sales levels are improving sequentially.
Standard & Poor's Ratings Services said last month it was
considering a cut to Penske's credit ratings following the news
that Penske intends to acquire General Motors Co.'s Saturn unit for
as much as $200 million. Analysts have said the road to recovery
for the slumping Saturn brand will be challenging.
Penske's shares closed Tuesday at $19.21 and haven't traded
premarket.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com