Asian Imports Drive Down Fuel Tank Profits for Canadian Manufacturer

Spectra Premium Industries Inc., a North American leader in the manufacture of automobile, light-truck and heavy-duty truck aftermarket parts, reported today that Pacific Rim competition in fuel tanks has been largely responsible for a decline in quarterly profits.
The company reported that quarterly earnings were down 7% over last year, despite a rise in sales, though the year to date position remains positive.
“The results of the second quarter were affected by heightened competition from Asia on fuel tanks. The majority of our other product lines maintained solid sales growth, namely our aluminum radiators, in which sales nearly doubled for the quarter compared to the same period a year earlier, as this product line continues to attract new customers both in Canada and the United States," said Jacques Mombleau, president and CEO of the company.
In results released today for the second quarter of fiscal year 2002-2003 ended July 31, 2002, the corporation generated net earnings of $4,087,000, or $0.13 per share, representing a 7% decline over the $4,404,000, or $0.14 per share for the same period a year earlier, excluding amortization of goodwill net of income taxes totaling $603,000. During this quarter, consolidated sales rose 3.2%, compared to the same period a year earlier, while the consolidated operating income stood at $7.1 million, representing a 5.3% decline over the $7.5 million recorded the previous year.
For the first six months of the fiscal year, net earnings rose to $5,324,000, compared to $5,527,000 a year earlier, excluding amortization of goodwill net of income taxes totaling $1,209,000. The corporation’s sales rose 5% for the first half to reach $126.3 million.
The outlook is positive for the future, though, reported Mombleau.
"We have made significant progress in the development of business relations with original equipment manufacturers (OEM) by concluding an agreement with Holden Ltd., an Australian subsidiary of General Motors," he said. “We are proud to announce today that in less than a year of development efforts, the commercial value of agreements already concluded with OEM’s is between $45 and $60 million, representing from $15 to $20 million on an annual basis. These contracts will start generating revenues in 2003 and are effective until July 2007. We are confident that other contracts will be added to our OEM business base this fiscal year,” concluded Mombleau.