UPDATE 2-Group 1 profit beats Wall Street view

Tue Apr 26, 2011 9:34am EDT

* Q1 EPS 67 cents vs Street view 62 cents

* Revenue jumps 18.3 pct on new vehicle sales

* Deliveries of Japanese cars may drop 50 pct in summer (Adds estimates, details on Japan impact)

DETROIT, April 26 (Reuters) - Group 1 Automotive Inc (GPI.N) reported a better-than-expected first-quarter profit but warned that deliveries of Japanese cars could drop as much as 50 percent this summer.

The company, which owns and operates auto dealerships in the United States and UK, reported adjusted earnings of $15.5 million, or 67 cents per share. Analysts' average estimate was 62 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 18.3 percent to $1.4 billion, primarily driven by sales of new vehicles.

The company said deliveries of vehicles from Japanese automakers could drop between 30 percent and 50 percent this summer due to disruptions in the global supply chain after the March 11 earthquake and tsunami in northern Japan.

"If deliveries are reduced to the extent mentioned above, it is likely that inventory levels will constrain sales for the second quarter and possibly third quarter," Group 1 said.

For showrooms that could get fewer vehicles, Group 1 will cut advertising spending and other expenses. It expects higher new vehicle margins in coming months for those stores.

The company said over the coming months it will focus on sales of used vehicles and its parts-and-service businesses, which account for more than 65 percent of gross profit. (Reporting by Deepa Seetharaman; editing by Gerald E. McCormick and John Wallace)

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