Group 1 Automotive Inc.'s net income more than doubled in the fourth quarter, thanks to a rebounding U.S. market and cost efficiencies achieved during a turbulent year.
The Houston dealership group's net income jumped 108 percent to $96.5 million in the period, on revenue that fell 3.9 percent to $2.99 billion. Gross profit rose 3.7 percent to $481.7 million.
In the U.S., which accounted for 81 percent of Group 1's total revenue in the fourth quarter, revenue was flat, at $2.4 billion. Same-store gross profit in the U.S. was up 5 percent to $401.2 million, while total gross profit grew 5.4 percent to $404.9 million. Finance and insurance gross profit per retail vehicle increased 12 percent to $1,772 in the quarter.
"Our strong fourth quarter results were highlighted by a further recovery in our U.S. revenue to last year's levels while maintaining outstanding cost discipline across the company," CEO Earl Hesterberg said in a statement.
The company saw a 25 percent improvement in technician productivity and a more than 33 percent rise in salesperson productivity in the fourth quarter, Hesterberg said.
As the coronavirus spread globally last spring, Group 1 furloughed about 4,800 employees in the U.S. and 2,800 in the U.K., and it terminated or furloughed more than 450 personnel in Brazil. By July, as business rebounded, the company was operating at 70 percent of pre-pandemic employment levels in the U.S. and U.K.
In October, as the company announced third quarter-results, Hesterberg said Group 1 was targeting a 20 percent efficiency improvement in sales and service profits as it built its U.S. and U.K. business back up from the furloughs.
Globally, Group 1's new-vehicle revenue was off 5.1 percent on a 12 percent drop in sales in the fourth quarter. Used-vehicle revenue slid 2.5 percent on 11 percent lower sales.
For the full year, the group's net income soared 65 percent to $276.2 million on revenue that fell 10 percent to $10.85 billion. Gross profit fell 2.6 percent to $1.77 billion. F&I gross profit per retail vehicle grew 10 percent to $1,669.
"With an expected market recovery in both the U.S. and U.K., we are in a good position to more actively pursue growth via acquisitions, as well as through our core aftersales and used vehicle businesses," Hesterberg said.
Group 1 shares were trading down 3.4 percent to $137.53 in late-morning trading in New York.
Record: Full-year profit of $276.2 million
Sales: Total fourth-quarter new-vehicle sales dropped 12 percent to 38,520 across the group's dealerships in the U.S., U.K. and Brazil. Retail used-vehicle sales fell 11 percent to 34,453.
In the U.S. alone, new-vehicle sales slid 5.4 percent to 30,610, while retail sales of used vehicles decreased 9.4 percent to 26,917.
For all of 2020, new-vehicle sales declined 17 percent to 140,221 globally. Retail used-vehicle sales were off 12 percent to 140,118.
Full-year U.S. new-vehicle sales decreased 14 percent to 105,022, while retail used-vehicle sales dropped 10 percent to 108,411.
Same-store sales: U.S. new-vehicle sales declined 5.6 percent to 30,357 in the fourth quarter. Same-store retail sales of used vehicles fell 10 percent to 26,556.
For all of last year, Group 1's U.S. same-store new-vehicle sales were down 15 percent to 103,790, while retail used-vehicle sales dropped 11 percent to 106,611.
Group 1 ranks No. 4 on Automotive News' list of the top 150 dealership groups based in the U.S., with retail sales of 169,136 new vehicles in 2019.
