DETROIT (Reuters) – Group 1 Automotive Inc <GPI.N> on Thursday posted a lower second-quarter profit as the negative effects of Britain’s upcoming exit from the European Union overshadowed strong results in the U.S. market.
“The negative in our world is just the difficulty in the UK due to Brexit issues hitting consumer confidence, which hits car sales,” Group 1 Chief Executive Earl Hesterberg said in a telephone interview.
“The fact that we could set an all-time quarterly record with no significant financial contribution from over 20 percent of our business is pretty impressive,” he added.
Group 1, the No. 3 U.S. auto dealership group, said it is performing a “significant cost reduction effort” in Britain in response.
J.P. Morgan analysts in a research note called the results “not stellar,” but said Group 1 trades at a discount to its peers and that any weakness in the stock could signal a buying opportunity. Shares of Group 1 were off 95 cents at $87.04 in afternoon trading.
Net income in the second quarter fell almost 13% to $49.2 million, or $2.64 a share, from $56.5 million, or $2.72 a share, in the year earlier quarter.
Excluding charges related to catastrophic weather and asset impairments, Group 1 earned $2.83 a share. Analysts were expecting $2.76 a share, according to IBES data from Refinitiv.
Revenue rose 2.1% to $3 billion, above the $2.92 billion analysts had expected.
The Houston-based company, with dealerships in the United States, Britain and Brazil, reported a 3.7% increase in gross profit in the quarter as revenue from new-vehicle sales rose 0.6% despite a slight decrease in unit sales, and retail used-vehicle revenue increased 2.1% on 4.6% growth in unit sales.
Same-store revenue rose 6% in the United States, while it slid 7.5% in Britain.
Group 1’s U.S. operations accounted for almost 76% of total revenue and about 83% of gross profit, while British operations accounted for about 20% and 14%, respectively.
(Reporting by Ben Klayman in Detroit; Editing by Steve Orlofsky)