Spectra Premium Industries Inc. has confirmed that its strategic reorganization has been completed.
The North American supplier of automobile, light- truck and heavy-duty truck aftermarket parts and manufacturer of high-pressure die cast magnesium alloy parts and steel fuel tanks in the original equipment manufacturer market, has also announced its financial results for fiscal 2004-2005 ended January 31st, 2005.
The corporate reorganization was undertaken more than two years ago following a dozen acquisitions made by the company in the aftermarket segment from 1998 to 2001.
This process resulted in the closure of five plants, the discontinuation of two product lines, the closure of two main distribution centres and about 10 U.S. regional warehouses during the last three years.
In the end, the changes resulted in rationalization and integration costs of more than $18 million during the last three fiscal years, and was completed with the transfer of radiator manufacturing activities from the Stratford plant to that of Laval during the past months.
As a result, fiscal 2004-2005 was the last fiscal year in which the company recognized rationalization and integration costs related to these acquisitions.
“Today, our rationalization and integration program is completed, operational labour and productivity problems at our new Boucherville hub are resolved and the aluminum radiator manufacturing plant in Laval will operate at full capacity as of the second quarter of fiscal 2005-2006, as radiator inventory levels will have returned to normal levels. All of this, coupled with the acquisition of Trimag in the middle of last year, which will substantially increase our sales volume in the OEM segment, in addition to diversifying our business risks, enables us to look at the next fiscal year with optimism and we forecast a return to profitability as of the second quarter of the current fiscal year,” commented Mr. Jacques Mombleau, president and chief executive officer of Spectra Premium.
During the fiscal year, consolidated sales reached $253.9 million, up 10.5%, compared to $229.9 million for the previous fiscal year. This sales growth was mainly generated from the OEM segment, and most particularly from the acquisition of Trimag concluded on August 2, 2004. Consolidated operating income stood at $1,038,000, compared to $7,628,000 a year earlier. The application of new accounting policies concerning the recognition of forward exchange contract transactions had a negative impact on operating income of close to $800,000, compared to a year earlier. Rationalization and integration costs of $6,124,000 were incurred for the fiscal year, compared to $5,112,000 the previous year. These costs mainly result from the termination of aluminum radiator manufacturing activities at the Stratford plant in Ontario on November 19, 2004, and the write-off of $1.5million in air-conditioning part inventories related to business acquisitions made in previous years in the aftermarket.
Fiscal 2004-2005 ends with a net loss of $1,369,000, or a loss of $0.05 per share, compared to a net income of $2,252,000, or $0.06 per share a year earlier.
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