Genuine Parts Co.'s (GPC) first-quarter net income skidded 28%
as weak consumer spending and a decline in industrial production
hurt sales.
But shares jumped 8.6% to $34.15 as earnings topped analysts'
expectations.
"The effects of the economic slowdown are likely to persist for
several more quarters," said Chairman and Chief Executive Thomas C.
Gallagher. However, he expects the company to show "gradual
improvement in our overall results as the year progresses."
Overall weak spending and declining industrial production can
offset the gains many makers and distributors of replacement parts
have seen as cash-strapped consumers put off buying new vehicles in
favor of patching up old ones.
Genuine, the operator of NAPA parts stores, posted net income of
$89.2 million, or 56 cents a share, down from $123.5 million, or 75
cents a year earlier. Net sales dropped 11% to $2.44 billion.
Analysts surveyed by Thomson Reuters expected earnings of 49
cents a share on revenue of $2.49 billion.
Gross margin inched up to 30% from 29.9%.
Sales in the key automotive unit fell 6.6% as profit dropped
3.6%. The industrial segment saw sales fall 16% while profit was
halved.
Genuine Parts is the largest member and majority owner of the
National Automotive Parts Association, a voluntary trade group that
distributes automotive replacement parts in North America. Genuine
Parts also distributes industrial parts, business products and
electrical components.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com