Genuine Parts Profit Hurt by Currency Rates

Genuine Parts Co. reported its profit slid 2.6% in the final quarter of the year as a challenging economic environment and adverse currency rates hit the automotive replacement parts distributor's top line.

Revenue results were worse than Wall Street expectations, and shares slipped 1.6% to $86.45 in premarket trading.

The Atlanta operator of NAPA Auto Parts started as an independent garage and has grown through acquisitions of companies in the automotive and industrial industries. Over the summer, Genuine Parts bought an automotive business in Australia to increase its presence there. Outside of the U.S., the company also does business in Canada and Mexico.

With nearly a fifth of its sales generated abroad, the company has been hurt by a stronger dollar, which makes its products more expensive outside of the U.S. and diminishes revenue once repatriated. In the latest period, the dollar shaved about 3% off the top line and dented earnings by three cents a share, Genuine Parts said.

"As we entered the fourth quarter, we had anticipated a challenging sales environment," Chief Executive Tom Gallagher said. "That said, we are pleased with the positive underlying sales growth in our automotive business as well as the solid industry fundamentals supporting our growth initiatives."

He said the company's nonautomotive businesses--in particular the industrial and electrical distribution segments--were dragged by difficult macroeconomic conditions.

Overall, the company reported a profit of $161.3 million, down from $165.6 million a year earlier. On a per-share basis, profit was flat at $1.07, aided by a lower share count.

Revenue fell 3.7% to $3.68 billion.

Analysts projected earnings of $1.01 a share on $3.75 billion in revenue, according to Thomson Reuters.

Also Tuesday, the company raised its quarterly dividend 6.9% to 65.75 cents. That projects to an annual rate of $2.63, up from $2.46. Genuine Parts said 2016 marks the 60th consecutive year of increased dividends paid to shareholders.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

February 16, 2016 09:55 ET (14:55 GMT)

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