AutoNation profit hits a six-year low
BY GOPAL RATNAM
AutoNation, the largest publicly traded U.S. car dealer, said fourth-quarter profit dropped 31 percent to its lowest in six years as cooling economies in California and Florida pulled down sales.
Net income fell to $51.7 million, or 28 cents a share, from $75.2 million, or 36 cents, a year earlier, the Fort Lauderdale-based company said in a statement Thursday. The results trailed analysts' estimates. Sales fell 4.1 percent to $4.2 billion.
The two states, which account for half the company's new-vehicle business, are bearing the brunt of a slowdown in housing that's weighing on consumer spending.
AutoNation said it doesn't foresee a quick rebound.
''We expect to continue to see a challenging new-vehicle retail market,'' Chief Executive Officer Michael Jackson said in the statement.
U.S. sales of new cars and light trucks may fall to about 15.5 million from 16.1 million in 2007, Jackson said.
Excluding income from discontinued operations, profit was $49.7 million, or 27 cents a share. Analysts expected the retailer to earn 32 cents, the average of 11 estimates compiled by Bloomberg.
Economic growth slowed to an annual rate of 0.6 percent in October through December following a 4.9 percent pace the previous three months, the Commerce Department said Jan. 30.
Concern over falling home values, vanishing jobs and higher energy costs may be sapping Americans' willingness to spend on autos and other goods. Consumer spending, which accounts for more than two-thirds of the economy, increased 2.9 percent for all of 2007, the least in four years, the Commerce Department said.
Federal Reserve policy makers have lowered their benchmark lending rate to 3 percent from 5.25 percent since September to avoid a recession, moves that Jackson said may help revive demand.
''Recent action by the Federal Reserve to reduce interest rates could improve the automotive retail outlook in the second half of 2008,'' Jackson said in the statement.
Ford Motor Co., Chrysler LLC and most Asian automakers said U.S. sales fell in January, opening what could be a third straight year of decline for the industry.
The industry's annualized selling rate for January declined to 15.2 million cars and light trucks, from 16.65 million a year earlier, according to Autodata Corp. of Woodcliff Lake, N.J. That was the lowest since a 15.3 million pace in July.
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Print | posted on Thursday, February 07, 2008 11:57 AM