Auto parts seller LKQ slashes 2024 outlook on weakening demand

LKQ

25/07/2024 14:10

July 25 (Reuters) - Auto parts distributor LKQ Corp
 LKQ.O  cut its full-year profit and revenue forecasts on
Thursday, as macroeconomic pressures weigh on volumes, dragging
shares down 8.4% before the bell.
    High insurance rates and adverse warm weather have pressured
LKQ's sales of aftermarket collision parts and repairable claims
in North America.
    The company's performance in Europe has also been hampered
by strike activity and rising wages, outside of the sluggish
consumer demand.
    The Chicago, Illinois-based company has been carrying out
global restructuring to improve profits in light of inflated
commodity costs and softening demand.
    "We believe current market headwinds are temporary in nature
but expect them to persist for the balance of the year" said CEO
Rick Galloway, adding that LKQ has paused large-scale
acquisitions and upped the bar for tuck-in deals.
    However, the company warned that the cost cuts may not
offset the impact of its lowered revenue expectations.
    The company now expects to report adjusted earnings per
share between $3.50 and $3.70 for 2024, compared to its previous
guidance of $3.90 to $4.20.
    LKQ also forecast a 0.25% growth to 1.25% fall in organic
revenue from parts and services, compared to previous
expectation of a 2.5% to 4.5% growth.
    The company, which also sells scrap and other materials to
metal recyclers, posted sales of $3.71 billion for the three
months ended June 30, below analysts estimate of $3.87 billion
according to LSEG data.
    Second-quarter adjusted earnings per share of 98 cents also
fell below estimates of $1.03 per share.

 (Reporting by Raechel Thankam Job in Bengaluru; Editing by
Varun H K)
 ((RaechelThankam.Job@thomsonreuters.com;))