(Updates throughout with details)
DETROIT, July 30 (Reuters) - Auto dealer UnitedAuto Group Inc. reported flat second-quarter earnings on Wednesday as higher revenue was offset by higher costs for overhead and interest.
The company also said it had to take a $1.9 million reduction to earnings during the quarter because it found $3.1 million in false revenue in an audit of its Arkansas dealerships. UnitedAuto said the false revenue, booked between April 2001 and March 2003, was "immaterial" to its financial statements.
UnitedAuto said it earned $23.9 million, or 58 cents a share, compared with $23.9 million, or 56 cents a share, in the same quarter a year ago. Revenue increased 18.7 percent to $2.2 billion. It had told analysts it expected second-quarter earnings of 55 cents to 60 cents a share.
The Detroit-based company and other publicly traded auto dealership chains have been increasing their earnings in recent years by buying privately owned franchises.
But while UnitedAuto's revenue rose in the quarter, so did its costs. Sales, general and administrative costs rose 21 percent, and interest on inventory rose 37 percent.
UnitedAuto stood by its earnings forecast of $1.96 to $2.06 per share for all of 2003, excluding accounting charges, with a third-quarter estimate of 58 cents to 62 cents per share.
UnitedAuto operates 137 franchises in the United States and 74 franchises internationally, primarily in the United Kingdom.