AutoNation profits up on strong vehicle sales

DETROIT, April 23 Reuters reported that AutoNation Inc.the nation's largest seller of new and used cars and trucks, said on Tuesday that its first-quarter earnings rose 53 percent on stronger-than-expected industry sales of new vehicles.

The Florida-based retailer also raised its earnings forecasts for the second quarter and full-year, saying it now expected the industry to sell more than 16 million new vehicles this year.

AutoNation said first-quarter earnings totaled $91.7 million, or 28 cents per share, up from $59.9 million, or 17 cents a share, in the same period a year ago; earnings per share increased more than overall earnings due to a share buyback program. Revenues fell slightly to $4.75 billion, from $4.89 billion a year earlier.

In February, the company had told analysts it was expecting earnings in a range of 20 cents a share to 22 cents a share.

Although U.S. new vehicle sales were down 3.3 percent during the quarter, automakers and dealers had been bracing for a much steeper decline of up to 10 percent. Automakers have not shied away from using steep incentives to spur demand.

AutoNation said while revenues fell, it cut costs and improved profit margins for used vehicle sales, financing and service. The company also benefited from low interest rates, which reduced the cost of carrying inventory by $19 million.

The company bought eight new-vehicle franchises with combined annual revenues of $440 million. The company had said it was planning to add $500 million to $1.5 billion in annual revenues this year through buying up dealerships. It now operates 373 franchises in 17 states.

AutoNation said it now expects 2002 full-year earnings per share in a range of $1.12 to $1.15, and 2002 second-quarter earnings per share of 28 cents to 30 cents. Analysts had been expecting earnings of 28 cents a share for the second quarter and $1.03 per share for the full year, according to Thomson Financial/First Call.

Wall Street has been upbeat about the earnings prospects for AutoNation and other large dealer groups, as many shop for smaller dealerships to boost revenues and earnings. Shares of AutoNation have outperformed the Standard & Poor's 500 index by 32 percent since the beginning of the year.