by Michael Freeze
Managing Editor, Counterman magazine

ATLANTA, GA — Genuine Parts Co., on a conference call last Friday, said first-quarter earnings rose six percent as sales grew across its major business operations. Overall, the Atlanta-based company reported a profit of $106.6 million, or 61 cents per share, up from $100.2 million, or 57 cents last year. Sales grew 7 percent to $2.34 billion from about $2.2 billion. Automotive parts group net sales showed a 4 percent improvement to $1.17 billion from $1.13 billion last year.

“As we look forward, we continue to feel that market conditions are favorable for each of our businesses and we are positioned to have another good year in 2005.” said Thomas Gallagher, chairman, president and CEO, in a statement beforehand.

In the conference call with analysts, Gallagher stressed that despite weaker performance from Mexico and its ACDelco distributor, Johnson Industries, the automotive group performed well from the increase in NAPA business.

“The NAPA business performed better than the overall four percent automotive increase and pretty much, in line with our expectations. We knew, going into the quarter, we had our work cut out for us because the first quarter of 2004 was the best quarter of the year with the combined automotive up 10 percent and the NAPA operations up,” said Gallagher. “We think that the NAPA team came through the first quarter in pretty good shape and the comparisons are not quite as challenging in the quarters ahead.”

The company also announced it had entered into an agreement to sell four of its Johnson Industries locations. It expects to close the sale in late April.

“As far as the remaining Johnson locations, we continue to assess our options, but these operations are profitable,” said Gallagher. “Our focus is to run them as well as we possibly can and to have them contribute, in a positive way, to our overall automotive results.”

GPC also saw a seven percent increase in its company stores and a nine percent increase in its commercial business.

“(The commercial side) is a segment of our business that is awfully important to us,” said Gallagher. “We think (the results) indicate that our commercial initiatives are working pretty well for us, right now.”

During the call, the company said it was pleased with the NAPA team’s performance in the first quarter, and, although optimistic, GPC will cautiously anticipate a 4 percent to 6 percent growth rate for the automotive group for the remainder of the year.

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