Auto parts seller LKQ slashes 2024 outlook on weakening demand
Corrects CEO name in paragraph 5 to Justin Jude from Rick Galloway, who is the CFO of the company
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 Justin Jude, 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
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