Genuine Parts Company, parent of UAP Inc. in Canada, has reported a decline in quarterly gross and net revenues for the first quarter of 2009.
Overall, Genuine Parts Company (GPC) reported sales for the quarter of US$2.44 billion, which is down 11% over 2008, net income of US$89.2, down 28%.
Unexpectedly large hits to the bottom line came in two of the company’s four divisions, Industrial and Electrical, while Automotive (largely the NAPA business), and Office Products performed about as expected.
Automotive division business was down 7% on the quarter, the result of currency exchange shifts from its Canadian and Mexican business.
However, according to chairman, president and chief executive officer Thomas Gallagher, when these factors are taken into consideration, the Automotive division results are only off 1%.
Bright spots for company’s automotive business were few, but notable. Company-owned store operations generated low single digit increases in cash business (true retail). Commercial business with NAPA Auto Care customers also showed single digit increases on a same store basis. Major accounts in this category performance well, led by tire companies and Triple A accounts.
Also, the continuing rollout of the Asian and European vehicle parts program was deemed to be making progress.
However, commercial business in the fleet category was down substantially, into the low double digits for the quarter, and remains a significant challenge for the organization.
“It was a challenging quarter for us, as the effects of the slower economy impacted each of our four business segments,” says Gallagher. “ While we are not pleased with our first quarter operating results, the balance sheet at March 31, 2009, remains in excellent condition and we continue to strengthen our financial position through working capital and asset management initiatives, as well as steady and strong cash flows. We believe the use of our cash in several key areas, such as the dividend, opportunistic share repurchases, the ongoing investment in each of our businesses and strategic complimentary types of acquisitions, serves to maximize the total return to shareholders.
“The effects of the economic slowdown are likely to persist for several more quarters. Clearly, these are challenging times; however, our expectation is to show gradual improvement in our overall results as the year progresses. The management teams in each of our business segments are focused on the diligent execution of their respective growth and operating strategies, the prudent management of their cost structure and the continued emphasis on further strengthening our balance sheet.”