Group 1 Automotive Inc. reported strong second quarter earnings, thanks to rising vehicle sales and firm pricing in the U.S. and the United Kingdom, and improvements in its Brazilian division despite tough economic conditions in that country.
The Houston-based dealership group said adjusted net income jumped 20 percent to $47.9 million, a quarterly record. Group revenue increased 8.6 percent to a quarterly record $2.7 billion.
At the same time, the company was able to keep a lid on costs. Sales, general and administrative expenses fell to 71 percent of gross profits -- 1.7 percentage points lower than a year ago.
The record quarter stemmed from “the combination of continued solid top-line growth in the United States and the United Kingdom, combined with improved expense leverage,” President and CEO Earl Hesterberg said in a statement.
Group 1 owns 148 automotive dealerships, 193 franchises, and 38 collision centers in the U.S., U.K. and Brazil.
In the U.S., robust new- and used-vehicle sales lifted revenue 11 percent in the second quarter, to $2.3 billion. U.K. operations saw revenue climb 23 percent to $308.2 million, on a surge in new- and used-vehicle sales.
In Brazil, which has been a trouble spot in previous quarters, Group 1 generated gross profit of $15.5 million, slightly more than a year ago, as a result of cost-cutting initiatives.
Hesterberg, however, noted that “overall market conditions have continued to deteriorate” in Brazil.
During the second quarter of 2015, Group 1 disposed of one Audi dealership in South Carolina and terminated two Peugeot franchises in Brazil.
So far this year, the company has acquired two Audi franchises that are expected to generate approximately $240 million in annual revenues and shed four franchises that generated trailing 12-month revenues of about $30 million.