DETROIT, July 26 (Reuters) - Group 1 Automotive on Thursday posted a 44 percent increase in quarterly profit that topped Wall Street’s expectations on strong used car sales and cost cutting efforts.
The No. 3 U.S. auto dealership group’s Chief Executive Earl Hesterberg called the second-quarter results “solid,” citing a relatively strong U.S. market, the company’s focus on used car sales and cost cutting.
“These results demonstrate our ability to grow earnings in a flat retail sales environment,” he said in a statement.
Shares of Group 1 rose as high as $72.70, or up 11.8 percent, and were still up 3 percent at $66.99 a share in morning trading on the New York Stock Exchange.
Stephens analyst Rick Nelson in a research report cited the group’s cost controls as a “standout” and said used car sales were stronger than expected. Company officials said on a conference call they expect used-car sales volume growth in the second half of the year.
Group 1 reported net income of $56.46 million, or $2.72 a share, up from $39.13 million, or $1.84 a share, a year earlier.
The adjusted earnings were $2.45 a share, easily topping the $2.14 analysts polled by Thomson Reuters I/B/E/S had expected.
Revenue rose 10 percent from last year to $2.94 billion, just above the $2.92 billion analysts had expected.
The company, with dealerships in the United States, Britain and Brazil, reported a 8.2 percent increase in gross profit in the quarter as revenue from new-vehicle sales rose 7.4 percent and retail used-vehicle revenue jumped almost 20 percent. Same-store used retail unit sales rose 11 percent.
Group 1’s U.S. operations accounted for almost 74 percent of total revenue and 80 percent of gross profit, while British operations accounted for about 23 percent and 17 percent, respectively. (Reporting by Ben Klayman Editing by Marguerita Choy)