Profits Uni Select fall; the action tumbles 10%

Mainly due to lower sales, net profits of Uni-Select (TSX: UNS) shrank by half in the fourth quarter and were well below the expectations of financial analysts.

Investors did not appreciate: the action of the company Boucherville fall 9.6 percent Thursday to close at $ 21.50, at the Toronto Stock Exchange. We must go back to 2008 to find a course that low.

During the period ended December 31, Uni-Select has recorded a net profit of U.S. $ 4.7 million (22 cents per share), down 49.8 percent compared to 9.1 U.S. $ million (42 cents per share) released during the corresponding quarter of 2011.

Excluding special items, earnings per share were 27 cents, while analysts on average expected 39 cents.

The quarterly revenue totaled U.S. $ 424.3 million, down 2.8 percent.

The decrease is explained by the "more difficult economic context that affects the secondary market of the automotive, mainly in parts of northeastern United States and eastern Canada," says the company in a statement Thursday.

The decline in revenues has hurt profitability because "expenditures could not be adjusted at the same pace," precise Uni-Select. Costs related to the implementation of a new ERP have also erodes margins.

"The slowdown in the market is not a surprise to us, but the importance of the impact of the downturn on Uni-Select is certainly," he says analyst Leon Aghazarian, the National Bank Financial in a note.

For the entire year 2012, net profit amounted to U.S. $ 30 million (U.S. $ 1.39 per share), down from 44.3 per cent to U.S. $ 53.9 million (2 , U.S. $ 49 per share) garnered in 2011. Annual sales rose 2.3 percent to U.S. $ 1.82 billion.

The President and Chief Executive Officer of Uni-Select, Richard Roy, said that the company would continue to implement its "optimization plan" aimed at reducing fixed costs and working capital.

In 2012, about 200 support positions have been deleted while 24 shops and a warehouse were farms.

Mr. Aghazarian not foresee any improvement in the short term for Uni-Select, but he is optimistic longer term.

"Once the headwinds will be dispelled, the demand for auto parts should benefit from positive indicators as the average age of vehicles and growth Kilometers traveled (United States)," said he writing.

By Sylvain Larocque