UPDATE 1Group 1 profit drops sees weak 2008 auto sales
(Adds detail, background)
DETROIT, Feb 26 (Reuters) - Auto dealership chain Group 1
Automotive Inc (GPI.N: Quote, Profile, Research) on Tuesday reported a 63 percent decline
in quarterly earnings after writing down the value of some
dealerships and cautioned the U.S. auto industry is headed for
lower sales in 2008.
Fourth-quarter net income fell to $5.5 million, or 24 cents
per share, from $14.8 million, or 61 cents per share, a year
earlier. Revenue rose 1.5 percent to $1.5 billion.
Excluding one-time items, Group 1 earned 70 cents per
share.
Group 1 said it took a charge of $16.1 million, or 46 cents
a share, in the fourth quarter to write down the value of
assets, including six dealerships the company determined were
no longer worth their acquisition value.
The company forecast that comparable-store sales — a key
measure of turnover for retail operators — would fall between
3 percent and 5 percent in 2008 as industrywide U.S. auto sales
slip to 15.5 million vehicles or lower.
U.S. auto sales fell for a second consecutive year in 2007,
dragged down by a housing market slump and tighter credit
markets. Sales of cars and light trucks dropped to 16.15
million units in 2007, down 2.5 percent.
Many analysts and some industry executives see a risk for a
drop down to near 15.5 million vehicles or slightly below.
Some major automakers like U.S. industry leader General Motors
Corp (GM.N: Quote, Profile, Research) still see stronger demand in the second half.
(Reporting by Kevin Krolicki; editing by John Wallace)
