Auto parts distributor LKQ cut its full-year sales forecast on Tuesday and missed estimates for first-quarter profit amid falling metal prices and softening demand for spares in North America.
“Our first-quarter results were below our expectations as our Wholesale – North America segment was confronted with a reduction in repairable claims and the resulting pressure on demand, which we believe is primarily attributable to record warm weather across the United States,” CEO Dominick Zarcone said.
LKQ, which also sells scrap and other materials to recyclers, had earlier flagged low commodity prices and said they would continue to be a headwind for its self-service segment.
In the last few months, the Chicago, Illinois-based company has undertaken initiatives to improve profits amid inflated commodity costs and softening demand for specialty vehicles accessories, specifically for recreational vehicles.
It now expects to report organic revenue growth for parts and services between 2.5% and 4.5% for 2024, down from its prior guidance of 3.5% to 5.5%.
GAAP per share earnings for the full year are expected to be between USD3.32 and USD3.62, below the previous guidance of USD3.43 and USD3.73.
However, LKQ reaffirmed its 2024 adjusted earnings per share outlook of USD3.90 to USD4.20 on the back of its margin expansion actions.
The firm also said that on April 16, it divested its operations in Slovenia and simultaneously entered into an agreement to divest its Bosnia operations. The terms of the transactions were not disclosed.
LKQ reported adjusted earnings per share of USD0.82 for the first quarter, missing analysts’ estimate of USD0.95 per share, according to LSEG IBES data.
It also posted sales of USD3.70 billion for the three months ended March 31, marginally below estimates of USD3.76 billion.
