Penske Automotive Reports Decline in 2Q Income

BLOOMFIELD HILLS, Mich. — Penske Automotive Group Inc. reported second quarter income from continuing operations of $19.8 million, down from $39.0 million reported in the year-ago period. Total revenue in the second quarter was $2.3 billion compared to $3.3 billion in the same period last year.

Total retail sales revenues decreased 28.1 percent compared to the year-ago period, driven principally by continuing broad-based weakness in the new-vehicle market in the U.S. and the U.K. Same-store total retail revenues declined 31.3 percent. Excluding changes relating to exchange rates, total retail revenues on a same-store basis declined 24.9 percent. Despite the challenging operating environment, same-store service and parts revenues declined only 4.4 percent excluding changes relating to exchange rates.

During the second quarter, the company further reduced its inventories and debt. As of June 30, 2009, inventories were $1.3 billion and total debt, including floor plan debt, was $2.2 billion, which represent reductions of $324 million and $368 million, respectively, since December 31, 2008. As of June 30, 2009, the Company had availability of $361 million under its revolving credit agreements.

“The performance of our business in the second quarter improved over the first quarter,” said Penske Automotive Group Chairman Roger Penske. “While market conditions are difficult, the cost reduction initiatives we implemented helped us remain profitable this year despite our decreased revenues. I am encouraged that our sales levels continued to improve sequentially. In fact, same-store retail revenues in the second quarter increased 8.1 percent compared to the first quarter of this year, including increases of 11.9 and 5.9 percent, respectively, in new and used retail sales revenues.”

Total revenues for the six months ended June 30, 2009, decreased 31.2 percent to $4.5 billion. Income from continuing operations for the first-half of the year was $36.0 million, compared to $70.8 million in the year-ago period. The 2009 results include $6.5 million of after-tax gain, relating to the repurchase in the first quarter of $69 million principal amount of the company’s 3.5 percent senior subordinated convertible notes due 2026. Excluding this gain, adjusted income from continuing operations amounted to $29.5 million.