Wescast Industries Inc. of Brantford, Ont., OEM supplier of cast exhaust manifolds for passenger cars and light trucks, has reported 2010 first quarter sales of $63.0 million and net earnings of $4.5 million, making it the second consecutive quarter that the company has generated profitable results as economic and automotive market conditions continue to improve.
As noted, the company reported consolidated sales of $63.0 million, an increase of 47.6% compared to the $42.7 million reported in the first quarter of 2009. The substantial sales increase was due mainly to much higher volumes as a result of the improved economic and automotive market conditions.
The company’s Asian operation is continuing its launch and generated significantly higher sales in the first quarter of 2010 compared to the same period in 2009.
The company reported net earnings of $4.5 million for the quarter compared with a net loss of $9.8 million reported in the first quarter of 2009. The net earnings per share on a diluted basis was $0.34, compared with a net loss per share of $0.74 reported in the first quarter of 2009.
Included in net earnings for the quarter was a $3.9 million curtailment gain related to an amendment made to one of the company’s unfunded retiring allowance plans as part of management’s ongoing restructuring efforts.
The gain was recorded in cost of sales. The company expects that the plan amendment will reduce future defined benefit expense by approximately $1.1 million on an annual basis, assuming the actuarial assumptions are consistent with those used in fiscal 2009. In the short term, the company expects that benefit payments will not be impacted by the amendment but anticipates benefit payments to be significantly lower in the long term.
The increased profitability compared to the first quarter of 2009 was due to higher volumes, the curtailment gain mentioned above, improved operational performance, especially in Europe, and reduced operating and selling, general and administration costs.
Foreign exchange losses on working capital, inter-company loans and the company’s U.S. future income tax asset amounted to $1.2 million in the first quarter, compared to foreign exchange losses of $0.3 reported in the first quarter of 2009. Also, in the first quarter of 2009 a program cancellation fee of $1.2 million was received by the company and included in the net loss reported. There was no such fee in the first quarter of 2010.
Wescast Industries Inc. designs, casts, machines and assembles exhaust system components for automotive original equipment manufacturers (OEMs) and Tier 1 customers for the car and light truck markets in North America, Europe, Asia, Africa, South America and Australia. The company employs approximately 1,700 people in seven production facilities and five sales and design centres in Canada, Hungary, the United States, Germany, Japan and China.