US: Penske earnings beat; sales up 11%

Reuters - Penske Automotive Group, the second-biggest U.S.-based auto dealership group, posted higher-than-expected fourth-quarter earnings on Wednesday on an 11 percent sales rise.

Chief Executive Officer Roger Penske said 2011 was the most profitable year in the company's history, which helped it expand its business with about $1 billion in "opportunistic acquisitions," including a British auto group bought last month.

Penske Automotive has benefited from the gradual improvement of the global auto industry since the 2008-2009 financial crisis. Auto dealership groups like Penske outperformed the Standard & Poor's 500 stock index in 2011 by 25 percent, according to analysts from Sterne Agee.

U.S. auto sales are expected to rise to 14 million new vehicles in 2012 from 12.8 million in 2011, the National Automobile Dealers Association said.

Same-store retail revenue increased for Penske in the fourth quarter by 8 percent.

Average gross profit margin per new vehicle sold rose 8.4 percent, and the average transaction price for a new vehicle rose 4.4 percent to $38,800, above the industry average because Penske is weighted heavily toward premium and luxury cars.

At the end of 2011, premium brands of cars accounted for 70 percent of Penske's new vehicle sales, up from 68 percent a year earlier. BMW, Volkswagen AG's Audi brand and Daimler AG's Mercedes-Benz accounted for 48 percent of new vehicle sales in the fourth quarter.

Income from continuing operations was 47 cents per share, compared with expectations of 40 cents, according to analysts surveyed by Thomson Reuters I/B/E/S.

Fourth-quarter revenue of $2.96 billion was up from $2.67 billion a year earlier. The average estimate was $2.97 billion.

Net income was $47.7 million, or 53 cents per share, compared with $28.5 million, or 31 cents per share, a year earlier.

Full-year 2011 revenue rose 12 percent to $11.56 billion. Net income for the year rose 63 percent to $176.9 million, or $1.94 per share, from $108.3 million, or $1.18 per share, in 2010.

Penske operates 332 auto franchises, half in the United States and Puerto Rico and half outside North America, mainly in Britain. The company ranks behind AutoNation Inc, which reported fourth-quarter revenue of $3.68 billion.

In 2011, Penske acquired 2.45 million shares of its common stock at an average price of $18.07 each. It has board authorization to purchase up to $106.8 million of its outstanding stock, debt or convertible debt.