Auto shares continue to gain in 2nd qtr.
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Global automotive stocks rose in the second quarter as the industry continued its recovery and supply-chain worries related to Japan's March earthquake began to fade.
In the April-June quarter, returns on global automakers and suppliers and U.S. retail groups all gained, the Automotive News/PwC Shareholder Value Index showed.
The index for global automakers increased 7.8 percent from the first quarter, while the index for global suppliers jumped 12.9 percent. The index for U.S. retail groups climbed 5.9 percent.
While retail groups' returns trailed returns for the others in the quarter, the retailers were far ahead of suppliers and automakers in 12-month returns. Over the past 12 months investors had an average 91.1 percent return in U.S. retail groups' stocks, according to the index, compared with returns of 66 percent for suppliers' stocks and 61.9 percent for automakers' stocks.
The returns varied by region, as Europe had consistent growth driven by demand in the luxury-car market worldwide. Meanwhile, in the United States, the "sluggish, or jobless, recovery" continued to slow growth, Darrell Kennedy, PwC transaction services manager, told Automotive News.
Demand in developing markets such as China and India continued to drive returns for shareholders in global automakers and suppliers.
The index measures a company's total shareholder return, accounting for share price, dividends and share splits, buybacks and other changes in shareholder equity over the past quarter, year and three years.
It includes publicly owned automakers with a minimum annual volume of at least 1 million units, public auto suppliers with annual sales of at least $3 billion and Fortune 1000 public auto retail groups with at least half of their unit sales from new vehicles.
Strong suppliers
In the second quarter, Asian suppliers fared best. The top five in the supplier return rankings were all Asian companies. Calsonic Kansei Corp. took the top spot with a 51.1 percent increase in the quarter.
Asian suppliers facing parts shortages and inventory issues as a result of the March 11 earthquake began to stabilize production in the second quarter, Kennedy said.
"If they're not at 100 percent capacity now, they are starting to put capacity in, so we've really seen some of the suppliers in those regions in the last quarter start to produce a little bit more of shareholder returns," he said.
One- and three-year returns also were generally positive for suppliers across the board. Suppliers Valeo SA, Plastic Omnium Co., Hyundai Mobis Co., TRW Automotive Holdings Corp. and BorgWarner Inc. all showed double- or triple-digit percentage increases in 12- and 36-month returns.
Europeans, Asians lead
European automakers Fiat S.p.A, BMW AG and Volkswagen AG led their peers in second-quarter and one-year returns. All three companies posted returns of more than 20 percent in the second quarter and one-year returns of more than 100 percent.
Over three years, Hyundai Motor Co. was No. 1 with a return of 242.1 percent. The three-year index was the most volatile, with five automakers posting negative returns.
The growth of the automakers has been driven by product development, Kennedy said. Over the past five years many of the companies went through "tremendous restructuring," but the benefits of those efforts have been realized.
"The shareholder performance we saw in the past has subsided," he said. "What we're seeing now is a lot of shifting in OEM returns based on product development, green initiatives, and other items that are now starting to become more forward after the economic recession and a lot of the restructuring initiatives."
Ford Motor Co. and General Motors were the only two automakers to post negative returns in the second quarter. GM's returns for the one- and three-year periods were not tallied because of its 2009 bankruptcy.
Kennedy said both companies are in a better position to succeed than they were in the past, but the overall economy is dragging down their stock value.
"Some of the overall U.S. indicators are starting to weigh [them] down a bit," he said. "That doesn't mean it's impacting what these companies are doing, but it has an overall weight on shareholder returns from a market perspective."
Publicly held U.S. retail groups continued their slow recovery from the recession. Every retailer posted a positive return in the latest quarter, one-year and three-year period, with one exception: Group 1 Automotive Inc.'s returns fell 3.5 percent last quarter.
You can reach Joseph Lichterman at jlichterman@crain.com.
