Penske Automotive, Owner of U.K. Dealers, Tumbles After Brexitby
U.S.-based auto retailer gets a third of revenue from the U.K.
Company says it’ll ‘wait and see’ after ‘unprecedented event’
Penske Automotive Group Inc., an operator of auto dealerships that gets a third of its revenue from the U.K, fell the most in 10 months after the British vote to pull out of the European Union sent the pound tumbling.
The stock dropped 10 percent to $33.18 at 11:34 a.m. New York time after falling 11 percent for the steepest intraday slide since August. Penske was the fourth-largest decliner in the Russell 1000 Index.
Penske got $6.4 billion of its $19.3 billion in revenue last year from the U.K. At the end of this year’s first quarter, the Bloomfield Hills, Michigan-based company had 170 of its 349 franchises outside the U.S., with most of those in the U.K. Chief Executive Officer Roger Penske said on a conference call in April that first-quarter volume sales of new vehicles rose 14 percent in the U.K. and were little changed in the U.S.
The company’s heavy reliance on luxury vehicles, its recent expansion in the U.K. and the effects of currency exchange rates may all hurt the stock, said Doug Rothacker, a Bloomberg Intelligence analyst. “If the dollar strengthens further there could be further negative translation effects for them,” he said.
Tony Pordon, the company’s executive vice president for investor relations, said the biggest risk from the Brexit vote is currency translation, but that he’s confident about Penske’s strong U.K. business and management team.
“We just wait and see, because it’s an unprecedented event,” Pordon said.