Penske's 4th-quarter profit jumps

By Bree Fowler

AP Auto Writer

NEW YORK (AP) -- The chairman of Penske Automotive Group Inc. said Wednesday that he expects demand for premium and luxury vehicles to continue to be strong this year, as more drivers head to dealerships to replace their aging cars and trucks.

Earlier in the day, the Bloomfield Hills, Mich.-based automotive retailer said its fourth-quarter profit jumped 67 percent to $47.7 million, or 53 cents per share, from $28.5 million, or 31 cents per share, in the same quarter a year earlier.

The company's earnings from continuing operations rose to $42.5 million, or 47 cents per share -- six cents ahead of Wall Street expectations.

Revenue rose 11 percent to $2.96 billion from $2.67 billion, as total retail unit sales increased 11 percent to 71,453 cars and trucks. Analysts, on average, expected $2.98 billion in revenue, according to a FactSet poll.

Chairman Roger Penske said the company continued to benefit from its focus on premium and luxury vehicle brands, many of which posted steep sales jumps in 2011.

"I would say the market finished the year with strong momentum and that the premium and luxury segments were very strong," Penske said in a telephone interview with The Associated Press. "We see that carrying on into the new year, not quite at same the pace as before, but still strong."

Premium brands such as BMW, Audi and Lexus accounted for 70 percent of Penske Automotive's sales during the recent quarter, up from 68 percent in the same period in 2010.

The chairman said he also expects the company to get a boost as the year progresses from improved inventories of Toyota and Honda brand vehicles, which together with their luxury Lexus and Acura brand vehicles, accounted for about 27 percent of the company's fourth-quarter sales.

Supplies of those vehicles were severely limited after the March earthquake and tsunami in Japan cut off pipelines of critical parts and forced the automakers to stop or reduce vehicle production.

Penske said his company's inventories of Japanese vehicles are currently at about 60 percent to 70 percent of where they should be, though they should be back to normal by the end of the first quarter.

Overall unit sales of new vehicles rose 4 percent, while unit sales of used vehicles jumped 20 percent. By region, the number of cars and trucks Penske sold in the United States jumped 14 percent, while international unit sales rose 2.6 percent.

In terms of revenue, the company said sales of new vehicles rose 8.5 percent to $1.52 billion, as the average selling price per new vehicle rose 4.4 percent to $38,816. Used vehicle sales jumped 18 percent to $837.9 million, as the average sale price of each used vehicle edged up 1.3 percent to $26,034.

Penske said he expects the supply of used vehicles to improve down the road, as a result of an increase in vehicle leasing and faster fleet replacements at rental car companies.

Revenue at dealerships open at least a year rose 5.9 percent, including a 9.3 percent increase in U.S. same-store revenue and flat international revenue. The measure is considered a key gauge of a retailer's performance, because it excludes results from stores that open or closes during the year.

For the full year 2011, Penske earned $176.9 million, or $1.94 per share, up from $108.3 million, or $1.18 per share, in 2010. Revenue rose to $11.56 billion from $10.33 billion.

In afternoon trading, Penske shares fell $1.10, or 4.4 percent, to $23.67.

Published: Fri, Feb 17, 2012