Penske Automotive's first-quarter profit, revenue misses analysts' expectations

BROOMFIELD HILLS, Mich. – Penske Automotive Group, Inc. (NYSE: NYSE: ), a global player in the transportation services industry, today disclosed first quarter 2024 financial results.

The company reported that net income attributable to common shareholders in the first quarter of 2023 decreased to $215.2 million, or $3.21 per share, from $298.3 million, or $4.31 per share. The average forecast was $3.39. Revenue rose slightly by 1.5% to $7.4 billion, but still fell short of analysts' expectations of $7.57 billion.

The company's first-quarter results were marked by strong service and parts revenue in the retail auto segment, which grew 9% to a record $746 million. Still, profitability was impacted by higher interest costs and lower Penske Transportation Solutions (PTS) equity earnings, primarily due to lower commercial lease utilization and consumer lease revenue, as well as higher interest rates and average debt balances.

Chairman and CEO Roger Penske commented on the cost control measures, noting that selling, general and administrative expenses increased to 70.7% of gross profit.

Retail auto dealers delivered 126,864 new and used vehicles, up 4%, and revenue for the segment increased 3% to $6.5 billion. However, same-store retail automobile gross profit decreased by 1%, of which same-store gross profit margin decreased by 4%.

Although a strong sales mix led to a 190 basis point improvement in gross margin, the retail commercial truck segment continued to face challenges with a 12% decline in unit sales due to inventory shortages.

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The company's liquidity remains strong at $1.7 billion and it continues to implement its capital allocation strategy through share repurchases and completion of strategic acquisitions. Penske Automotive acquired Rybrook Group Limited, which is expected to contribute approximately US$1 billion in annualized revenue, and announced that it will acquire more dealers in Australia.

Despite mixed financial performance, Penske Automotive's focus on cost control and strategic growth through acquisitions demonstrates a forward-looking approach to current market challenges. The company's ability to maintain liquidity and manage leverage (leverage ratio of 1.1x) reflects financial prudence amid volatile economic conditions.

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