DOW JONES NEWSWIRES
Penske Automotive Group Inc. (PAG) swung to a fourth-quarter
loss amid $502.4 million in write-downs as the auto dealer dealt
with worsened demand weakness.
Auto sales, weak for more than a year, tumbled starting in
September as the economy weakened further and financing for
purchases became tougher to come by. It has resulted in bankruptcy
rumors swirling around General Motors Corp. (GM) and Chrysler LLC,
which some say has further pressured sales.
The woes, and lack of any near-term turnaround expected,
resulted in the No. 2 publicly traded auto dealership by revenue
behind AutoNation Inc. (AN) accelerating cost-cutting efforts. The
company sees annual savings of $100 million from its efforts, which
include a dividend suspension announced Friday and a 4.3% cut in
payrolls disclosed in October.
Meanwhile, Penske posted a loss of $509.9 million, or $5.61 a
share, compared with year-earlier net income of $29.4 million, or
31 cents a share. Excluding the write-downs, the company reported
an adjusted loss from continuing operations of 2 cents per share
compared to an adjusted net from continuing operations of 34 cents
a year ago.
Revenue fell 29% to $2.16 billion for the company, which
primarily sells foreign and luxury cars. U.S. sales comprised 69%
of revenue.
Analysts surveyed by Thomson Reuters expected per-share earnings
of 4 cents with revenue of $2.55 billion.
Gross margin increased to 16.1% from 15%.
Same-store retail sales dropped 34% as the number of units sold
fell 26%, down 34% for new cars and 11% for used vehicles. Parts
and service same-store revenue decreased 9.3%, nearly all because
of the stronger dollar.
Shares ended Friday's session at $7.26 and haven't traded
premarket. The stock has fallen nearly 55% the past six months.
-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310;
shirleen.dorman@dowjones.com