February 22, 2011 / 4:23 PM / in 8 years

Sonic, Asbury profit up on auto recovery

DETROIT (Reuters) - Auto dealer groups Sonic Automotive Inc (SAH.N) and Asbury Automotive Group (ABG.N) posted higher-than-expected quarterly profits on sales that outpaced the recovery in an industry bouncing back from the recessionary levels of 2009.

Shares of Asbury gained 4 percent, while shares of Sonic declined almost 2 percent after a forecast for 2011 earnings that fell below the most bullish analyst expectations.

U.S. auto dealer groups have reported robust fourth-quarter earnings and bright outlooks for 2011, with most projecting a gradual recovery that would take the industry back to sales last seen in 2008.

Sonic and Asbury both cut costs during the downturn and both say they are poised for growth if consumer spending rises in 2011 as expected.

U.S. consumer confidence rose to a three-year high in February, according to the Conference Board.

“We definitely feel the momentum,” newly appointed Asbury Chief Executive Craig Monaghan in a telephone interview with Reuters. “We’re seeing more and more customers in the showrooms.”

Sonic, the No. 3 U.S. auto dealership group by vehicle sales, like Asbury, which is No. 6, concentrate on import brands like Toyota and Honda and luxury brands like BMW for most of their new vehicle sales.

But Sonic offered a forecast for overall U.S. auto sales and its own earnings in 2011 that both fell short of the most optimistic projections by Wall Street analysts.

The company expects 2011 earnings per share from continuing operations of between $1.18 and $1.28. By contrast, the average analyst forecast was $1.28 and the high end of the forecast range was $1.45.

For the fourth quarter, Sonic posted a nearly four-fold rise in net earnings to $64.4 million, or $1 per share, on a 17 percent gain in revenue to $1.84 billion.

Asbury recorded an even larger gain in earnings. Net profit jumped by 27 times to $5.4 million, or 17 cents per share, on a 22 percent rise in revenue to $1.02 billion.

Sonic’s executive vice president Jeff Dyke said the company expected auto sales to rise to near 12.5 million vehicles in 2011, up from 11.5 million in 2010.

By comparison, J.D. Power and Associates, a closely watched service that tracks new car sales through dealerships, last week raised its forecast for 2011 U.S. light vehicle sales to 13 million units, a rise of 13 percent from 2010.

That follows a rise of 11 percent in 2010 when new vehicle sales hit a near three-decade low.

Shares in auto dealer groups have shown robust gains since late September from No. 1 group AutoNation (AN.N) up 50 percent to Penske Automotive Group (PAG.N) up 73 percent. Sonic, Asbury and Group 1 Automotive (GPI.N) each have gained more than 60 percent.

Excluding one-time items, Asbury earned 37 cents per share in the fourth quarter, versus analyst expectations of 35 cents, according to Thomson Reuters I/B/E/S.

Sonic reported adjusted earnings per share from continuing operations of 30 cents, versus analyst expectations of 26 cents, according to Thomson Reuters I/B/E/S.

Reporting by Bernie Woodall, editing by Maureen Bavdek and Derek Caney

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below