Media preview day at the Canadian International Auto Show in Toronto on Feb 12, 2015.Fred Lum/The Globe and Mail
AutoCanada Inc. reported double-digit gains in revenue and profit in the fourth quarter, but its key Alberta market began taking a hit in the second half of December.
Canada's largest publicly traded dealership group said sales at some of its Calgary outlets fell by as much as 33 per cent in January amid the collapse in the price of oil and the impact it is having on consumer confidence in Alberta.
Worse winter weather than usual also hurt sales at some dealerships outside Alberta and others had operating issues that hurt sales volume and profit margin.
"Consequently, the company has experienced significantly lower-than-forecast vehicle sales and margins with a corresponding decline in dealership profitability in early fiscal 2015, resulting in weak performance relative to the comparative results of 2014," AutoCanada said in a statement accompanying its 2014 full-year and fourth-quarter financial results.
Vehicle sales at its Chrysler stores in Calgary fell 17.5 per cent in January, while those at its Japanese and South Korean-branded outlets in the city fell 10.2 per cent and 33.3 per cent, respectively. Industry data firm R.L. Polk said retail vehicle deliveries fell 9.4 per cent in Calgary as a whole in January.
"What we're seeing out there is primarily a deterioration of consumer confidence," AutoCanada chief executive officer Tom Orysiuk told analysts and investors on a conference call Friday.
The drop in Alberta sales, however, which also affected the company's stores in Edmonton and Grande Prairie, is "not even close" to the collapse in vehicle sales during the 2008-2009 recession, AutoCanada executive chairman Pat Priestner said during the call.
"This isn't a long-term problem at all," Mr. Priestner said. "I'm not that worried about it."
But the company is taking actions to reduce costs.
AutoCanada shares fell 21 per cent or $9.04 to $33.70 in early afternoon trading on the TSX.
The warning about "very challenging" market conditions came as the company reported fourth-quarter profit of $14.9-million or 54 cents a share, compared with $9.6-million or 42 cents a year earlier. Revenue rose 96 per cent to $653.5-million from $333.8-million.
Full-year revenue rose to $2.21-billion from $1.41-billion in 2013, partly on the strength of the acquisition of 17 dealerships last year.
Profit for all of 2014 rose to $53.1-million from $38.2-million or $2.31 cents a share versus $1.83.