Genuine Parts Cuts High End of 2016 Outlook Amid Profit Miss

Genuine Parts Co. lowered the upper ended of its 2016 earnings guidance as the automotive replacement-parts distributor reported that its second-quarter earnings fell 2%.

Shares fell 5.6% to $96.23 in recent premarket trading as per-share earnings and revenue fell shy of expectations. Through Monday's close, the stock has declined 3.8% from a roughly 1 1/2 year high last week.

For the year, Genuine Parts lowered the upper end of its per-share earnings outlook by a nickel and now expects $4.70 to $4.75. Genuine Parts affirmed its guidance for total sales growth of 1% to 2%.

The Atlanta company has continued to expand through acquisitions. Its most recent deals include Auto-Camping Ltd., expanding its automotive import parts business in Canada, and its deal for the janitorial and sanitation business of Rochester Midland Corp., which supports its diversification strategy and its S.P. Richards office products unit.

The company, which operates NAPA Auto Parts, said automotive segment sales edged down 0.7% to $2.09 billion, while industrial segment revenue fell 1.7%, office products revenue grew 0.8%, and electrical and electronic materials sales declined 5.2%.

"This quarter our automotive sales along with our other distribution businesses were all impacted by the challenging sales environment," the company's new chief executive, company veteran Paul Donahue, said in prepared remarks. "We offset some of this impact with key sales and gross margin initiatives as well as tight expense controls."

Over all, Genuine Parts reported a profit of $191.4 million, down from $195.4 million a year earlier. On a per-share basis, earnings were flat at $1.28 amid fewer shares outstanding. Revenue decreased 1% to $3.9 billion as growth from acquisitions was mostly offset by currency fluctuations.

Analysts polled by Thomson Reuters expected per-share profit of $1.29 and revenue of $3.98 billion.

Overhead expenses eased by 0.4%.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

July 19, 2016 09:35 ET (13:35 GMT)

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