UPDATE 4-AutoNation profit rises on strong new-car demand
July 19 (Reuters) - AutoNation Inc, the No. 1 U.S. auto retail group, reported a better-than-expected second-quarter profit on Thursday on robust demand for new vehicles.
The company also reiterated that it expected new car sales in the U.S. to hit mid-14 million vehicles this year.
"We continued to see a strong new vehicle selling environment in the second quarter, supported by genuine replacement demand, a healthy credit environment, and accelerated product offerings," AutoNation Chief Executive Officer Mike Jackson said.
AutoNation's shares initially rose as much as 2.8 percent, but analysts said a desire to take some of the profits realized on the stock's run-up led to a subsequent decline of 3.4 percent to $40.99 on the New York Stock Exchange. Shares had risen almost 40 percent so far this year through Wednesday.
Jackson said the U.S housing market had bottomed out, but employment still needed to recover. However, there was pent-up demand for new cars, with the average age of vehicles on the road at about 11 years.
Net income rose to $78.6 million, or 64 cents a share, from $71.9 million, or 48 cents a share, a year earlier.
Excluding one-time items, AutoNation earned 66 cents a share, topping the 59 cents expected by analysts polled by Thomson Reuters I/B/E/S.
Revenue grew 17 percent to $3.9 billion, above the $3.77 billion Wall Street estimate. Sales of new cars and trucks rose 29 percent, while AutoNation said the industry increased 15 percent.
AutoNation's board also authorized the repurchase of up to $250 million of its outstanding shares, raising the available level it can still buy back to about $368 million. During the second quarter, the company repurchased 3.7 million shares for an aggregate purchase price of $126.2 million.
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