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Group 1 Automotive delivers record Q2 despite faltering UK car sales

Earl J Hesterberg, Group 1 Automotive

Group 1 Automotive has highlighted the strength of its new car order books in the UK after reporting a record Q2 performance.

The AM100 car retail group delivered a 14.3% increase in revenues to $4.1 billion (£3.4bn) in Q2 as its gross profit rose by 18.3% to $768.4m (£636.4m) and diluted earnings per common share from continuing operations of $12.1 (£10) – the highest in its history.

But year-on-year sales comparisons in the UK declined in a period 12 months on from the sector's second COVID-19 lockdown recovery.

UK reveunes were down 8.3% to $639.9m (£530.1m) in Q2 as gross profit declined 4.5% to $83.2m (£68.9m) as new and used car sales volumes declined 18.2% to 11,964 units.

In May Group 1 revealed record turnover and profits in what was described as an “outstanding” Q1 for its car retail operations in the US and UK.

As a result, UK revenues remain up 5.9% (at $1.32bn, £1.1bn) and gross profit up 16% (at $176.1m, £145.9m) year-to-date to the end of June.

Year-to-date Group 1’s car sales volumes are 6.2% down at 23,216 in the UK.

In today’s (July 27) trading update, president and chief executive Charles Hesterberg focused on the recent successes of its US operations. He said: “Our record second quarter results were driven by record US revenues and gross profits.

“Our strength was demonstrated across the breadth of our US business as evidenced by a 34% growth in parts and service and a 20.3% increase in finance and insurance.

“A major contributing factor to our performance was the extreme speed at which we were able to integrate a large number of new acquisitions over the past 18 months which will provide more than $3.0 billion in expected annual additional revenues in the year ahead.

Commenting on the sector’s vehicle supply outlook, Hesterberg said: “New vehicle supply continues to be constrained, with no discernible change in the flow of new vehicle deliveries to our dealerships as compared to the most recent quarters. 

“In the US, we continue to see the majority of new vehicles either presold or sold shortly after delivery. In the UK, we continue to maintain a forward order book for new vehicles which extends into 2023.”

Last week AM reported that Group 1 had promoted its director of operations Mark Bridgland to the post of managing director – ending 22 months without an MD.

Bridgland will lead the operation of its 75 franchised sites operating from 55 locations across the UK, along with its 12 accident repair centres.

Group 1 repurchased 799,033 shares during Q2, representing approximately 4.6% of its current year beginning outstanding common shares, at an average price per common share of $173.9 (£144.1), for a total of $139m (£115.2m). During the current year it has repurchased 1.44m shares.

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