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Letter to the Editor

This article originally appeared in the November 2003 Issue of INSIGHT

Testing the Waters

As anticipated, LKQ Corp’s IPO appeared on the NASDAQ, symbol LKQX, diving into the stock market ocean at $13 per share. The recycled automotive parts provider’s stock is performing well, up 23 percent to a hair over $16 so far. If LKQ Corp can do as well as Keystone Automotive has been doing in 2003’s stock market, shareholders will be smiling. Keystone Automotive shares are up over 61 percent year-to-date to a nice $24.59 per share.

This year has been kind to both automotive sales stocks we track in our industry stock chart. AutoNation is up almost 50 percent and United Auto Group’s stock price has more than doubled since January.

Refinish materials manufacturers are still treading water in a market that remains flat. Akzo Nobel is concentrating on a big deal for its human pharmaceutical unit, Organon, which has entered into a global agreement with Pfizer Inc. for the exclusive worldwide development and commercialization of Organon's new psychotropic drug asenapine.

Despite reported earnings for the third quarter down 23 percent, Akzo Nobel’s CFO, Fritz Froehlich, praised the “solid performance” of the company’s Coatings and Chemicals division, and his emphasis on continued cost containment measures is wise.

PPG reported slightly lower third quarter earnings, but Coatings sales were up seven percent and Glass sales were up two percent for the Pittsburgh-based company. CEO LeBoeuf promised an “unwavering commitment” to generate cash and reduce costs.

Insurers are reporting hefty results. Allstate’s net income for the quarter more than doubled. Higher premiums and fewer claims than anticipated certainly boosted the numbers into the stratosphere for Allstate.

It will be interesting to hazard a guess as to whether or not any auto body shop consolidator will decide to jump in and offer an IPO in 2004. ABRA Auto Body & Glass and Caliber Collision Centers may be considering pros and cons about a stock offering.

Since the Boyd Group became an income fund, our industry stock chart could really use a few collision repair facilities on the roster of stocks.

Cautious optimism is still in the air for the U.S. economy as 2003 draws to its end. Nevertheless, unless bad weather strikes early and hard, delivering lots of fender bender repair orders to body shops before December 31, collision repair dollars will be down for the year for sure.

-Charles Baker-

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