Automotive and industrial replacement parts maker Genuine Parts Co. (GPC) Friday reported a decline in third-quarter profit, which, however, was better than Street estimates. The 18% profit decline was mainly due to lower quarterly sales across all business segments in what is turning out to be a challenging year for the company.
For the third quarter, net income of Atlanta, Georgia-based Genuine Parts dropped 18% to $107.64 million from $131.02 million in the same quarter a year ago. On a per-share basis, earnings were down 17% to $0.67 from $0.81 in the prior-year quarter.
On average, twelve analysts polled by Thomson Reuters expected earnings of $0.65 per share for the quarter. Analysts' estimate typically excludes one-time items.
Genuine Parts' net sales for the quarter decreased to $2.61 billion from $2.88 billion in the year-earlier quarter, a bit better than Street estimates of $2.60 billion.
The company operates in four segments: Automotive Parts, Industrial Machinery Parts, Office Products, and Electrical/Electronic Materials.
Automotive Group sales decreased 0.8% to $1.38 billion and Industrial sales declined 21.6% to $711.47 million. Office Products Group, S.P. Richards, sales dropped 4.9% to $436.29 million and sales of Electrical/Electronic Materials fell 29.5% to $89.36 million from the same quarter last year.
Commenting on the segmental performance, the company said the sales decline in Automotive group is actually an improvement, while considering the 7% and 5% sales declines recorded for the segment in the first and second quarters respectively. Genuine Parts also said that sales for the Industrial and Electrical Groups, although down year on year, were consistent with second quarter, reflecting the stabilization of conditions in the manufacturing segment of the economy.
"2009 has proven to be a challenging year for GPC. However, we continue to have confidence in the long-term positive fundamentals for all four of our business segments," said Thomas Gallagher, President and Chief Executive Officer.
Auto parts manufacturers were one among the worst hit by the economic whirlwind. The industry, which mirrors the automotive manufacturing industry, has seen many failures following demand softness experienced by automakers. An example being that of Lear Corp., which has filed for Chapter 11 bankruptcy protection with its many U.S. and Canadian subsidiaries. According to reports, at least 15 auto parts makers have filed for bankruptcy in the year 2009.
Amongst others in the industry, AutoZone Inc. (AZO) has reported a 3.1% drop in profit for the fourth quarter, mainly reflecting higher expenses, while prior-year results benefited from an additional week. Net income was $236.13 million or $4.43 per share. Sales were up 1% at $2.23 billion.
For the nine-month period, Genuine Parts' net income decreased 23% to $300.41 million from $387.63 million in the prior-year period. Earnings per share were $1.88, down 20% from $2.36 in the year-ago period. Sales dropped 11% to $7.59 billion from $8.50 billion in the year-earlier period.
Looking ahead, Gallagher said, "The balance sheet at September 30, 2009 remains in excellent condition and we continue to strengthen our financial position through working capital and asset management initiatives, cost reduction efforts and steady and strong cash flows."
GPC is currently trading at $37.91, down $1.05 or 2.70%, on a volume of 0.29 million shares. In the past 52-week period, the stock traded in the range of $24.93 to $40.62, with a three-month average volume of 0.95 million shares.
For comments and feedback: editorial@rttnews.com