Spectra Premium Third Quarter has Highs and Lows

Spectra Premium has reported that while overall sales were up in the last quarter, aftermarket sales actually declined.
Consolidated sales for the radiator and gas tank manufacturer reached $66.2 million, up 14.3%, compared to the same period of the previous fiscal year.
This sales growth results from the OEM segment and most particularly, from the recent acquisition of Trimag concluded on August 2, 2004. Excluding the impact of the exchange rate variations, sales have declined by 1.9% in the aftermarket segment.
Consolidated operating income stood at $616,000, compared to $3,179,000 the previous year.
Rationalization costs of $2,392,000 were incurred in the third quarter, compared to $768,000 for the same period a year earlier. These costs mainly result from the termination of aluminum radiator manufacturing activities at the Stratford plant in Ontario on November 19, 2004.
“During the first half of this quarter, sales and operating costs in the aftermarket segment were affected by temporary operational labour and productivity problems at our new hub in Boucherville. Today, inventories in our different Canadian and U.S. warehouses are back to desired levels and productivity in the Boucherville warehouse is gradually improving. In the OEM segment, the integration process of our most recent acquisition, namely Trimag, is progressing as planned and has contributed favourably to the results of the third quarter,” says Jacques Mombleau, president and chief executive office.
According to the company, following the application of new accounting policies concerning the recognition of the fair value of derivative financial instruments (forward exchange contracts), a gain of $1,458,000 was recognized during the third quarter to account for the fair value variation of forward exchange contracts on October 31, 2004 which amounted to $3.6 million.
Furthermore, a portion of the derivative financial instruments, held on February 1, 2004, matured and the Corporation realized a gain of $1.1 million, which was recorded to sales. Net income for the quarter amounted to $633,000, or $0.02 per share, compared to $1,480,000, or $0.05 per share for the same period a year earlier.