BRUSSELS -- Belgium's largest car seller D'Ieteren is expected to post lower sales and earnings when it reports its 2002 results before the market opens on Thursday as a slowing car market puts the brakes on profit.
Analysts and investors say they will also be eager for news on how the company expects to deal with a potential conflict in Iraq, especially at its car rental subsidiary Avis Europe.
Avis has been hit by falling demand for rental cars amid the global economic slowdown, and analysts said a war in Iraq would severely hit demand for travel.
"I am interested in any guidance on Avis and what they expect the market to do in light of a conflict in Iraq," said Wim Hoste, analyst at Bank Puilaetco.
According to a Reuters poll of six analysts, the company's net current profit is expected to drop 22.6 percent to 91.77 million euros. They are also expecting a seven percent drop in sales to 3.09 billion euros.
D'Ieteren, which is the exclusive distributor of Volkswagen, Audi, Rolls-Royce and Porsche cars in Belgium, has been suffering from falling car sales in its home country as the economic slowdown crimps demand for new cars.
Avis Europe has also weighed on the company -- the unit has said it expected a 15 percent drop in 2002 profits -- amid weak demand for rental cars, and analysts are not really expecting anything better this year.
"Looking forward, we believe 2003 (for Avis) should again prove lackluster, with volume expected to continue to suffer from the uncertain geopolitical situation at at least into (the first half)," ING said in a research note.
D'Ieteren's own outlook for this year has not been that great either as it recently said it does not see any improvement in the Belgian market until next year. It has not yet given a forecast for 2003, and analysts said it was too early to expect any news from the company on an outlook for 2003 given uncertainties surrounding the car market and Iraq.
But on a more positive note, D'Ieteren has said it hopes to boost market share this year despite a declining market, looking to sales of new types of vehicles such as Volkswagen's small people mover Touran and the four wheel drive Touareg.
D'Ieteren's shares have slid along with the car market. Since the beginning of this year, its shares have fallen 18.7 percent and have underperformed Belgium's Bel-20 blue chip index -- of which it is a component -- by 1.8 percent.