USA: Asbury Automotive expects 16% boost in Q4 gross profit
Automotive retail group Asbury Automotive expects earnings for the fourth quarter of 2004 to be about $0.42 per share, above analysts' consensus estimate of $0.33, and $1.61 per share for the full year.
Based on preliminary results, overall revenue and gross profit for the fourth quarter were up approximately 16% on a same-store basis from the prior year quarter, Asbury said in a statement.
All four sectors of the company's operations - new vehicles; used vehicles; parts, service and collision repair; and finance and insurance - have delivered double-digit same-store increases in gross profit for the quarter. For the full year 2004, total same-store revenue increased approximately 6% from the prior year, while same-store gross profit rose approximately 4%.
Asbury's financial result was not adversely affected by the devastating series of Atlantic hurricanes which slammed into the state of Florida during the third quarter of 2004, causing widespread damage and destruction to many automotive dealerships, and independent parts and service suppliers.
The company's president and CEO Kenneth Gilman noted: "We are particularly pleased with the balanced performance of our business model during the quarter. These results were attributable to a bounce in our Florida markets, which posted a 28% same-store increase in gross profit, following the hurricanes experienced in the third quarter, as well as a solid overall performance in our non-Florida platforms, which were up approximately 11% on a same-store basis."
Asbury has recently reorganised seven of its nine "platforms" into principally four regions: Florida; West (California, Texas & Oregon); Mid-Atlantic (North Carolina, South Carolina & Virginia) and South (Georgia & Arkansas); with Mississippi and Missouri remaining as stand-alone platforms. It said it expects a significant increase in management effectiveness as a result of this recent decision, as well as added operating and cost efficiencies.
Within this more streamlined structure, regional and platform CEOs will continue to have direct responsibility for day-to-day operations, as well as the independence and flexibility to respond effectively to local market conditions. The company also noted that in moving to this regional structure it would incur severance and other related one-time costs, which should be offset by anticipated expense efficiencies to be realised within the ensuing 12 months. A more detailed discussion of the regional alignment, as well as the related one-time costs and expense savings, will be provided when final audited results are reported in February.
For 2005, Asbury Automotive expects to earn between $1.70 and $1.78 per share from continuing operations but this does not reflect any of the anticipated costs or benefits associated with the regional reorganisation.
Fourth quarter earnings will be announced on February 24.