The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

Linamar Posts Record Highs in Quarterly Sales and Earnings, Sees Strong Margin Improvement & Positive Cash Flow

Wednesday, August 08, 2012

Linamar Posts Record Highs in Quarterly Sales and Earnings, Sees Strong Margin Improvement & Positive Cash Flow16:30 EDT Wednesday, August 08, 2012GUELPH, ONTARIO--(Marketwire - Aug. 8, 2012) - Linamar Corporation (TSX:LNR)Sales increase 14.8% over the second quarter of 2011 ("Q2 2011") to reach $852 million; Operating earnings up 47.7% over Q2 2011 to reach $64.7 million; EPS is up 51.2% over Q2 2011 to reach $0.65; New business wins continue to be strong, launch book at more than $2.3 billion; Industrial segment sales up 48.6% over Q2 2011 Industrial segment operating earnings return to double digit profitability of 10.1%; Powertrain/Driveline segment sales up 9.5% and operating earnings up 14.8%; Return on Capital Employed improved by 35.9% from Q2 2011 to reach 12.5%; Return on Equity reaches 17.3%; and Positive Cash Flow reduces Net Debt by nearly $50 million from the first quarter of 2012 ("Q1 2012) Three Months EndedSix Months EndedJune 30June 302012201120122011(in millions of dollars, except earnings per share figures)$$$$Sales852.3742.71,692.11,417.9Operating Earnings (Loss)Powertrain/Driveline49.743.3100.881.5Industrial15.00.521.5(1.5)Operating Earnings (Loss)64.743.8122.380.0Net Earnings Attributable to Shareholders of the Company42.128.081.752.9Earnings per Share0.650.431.260.82Operating HighlightsSales for the second quarter of 2012 ("Q2 2012") were $852.3 million, up $109.6 million from $742.7 million in Q2 2011.Sales for the Powertrain/Driveline segment increased by $61.0 million, or 9.5% in Q2 2012 to $703.7 million compared to $642.7 million in Q2 2011. The sales increase in the first quarter was impacted by:significant levels of newly launched programs in each of Canada, Mexico and Asia from the Company's substantial book of launch business; additional sales from new and expanded facilities such as the Company's new German facility; and higher volumes on increased consumer demand in the US; offset somewhat by decreased consumer demand in Europe. Industrial segment sales increased 48.6%, or $48.6 million from Q2 2011 to $148.6 million. The sales increase was: primarily due to significant increases in demand in the access equipment markets resulting from fleet replacement initiatives. The company's operating earnings for Q2 2012 were $64.7 million. This compares to $43.8 million in Q2 2011, an increase of $20.9 million.Q2 2012 operating earnings of $49.7 million for the Powertrain/Driveline segment were higher by $6.4 million from operating earnings of $43.3 million in Q2 2011. The segment experienced the following in Q2 2012:improved margins as production volumes increased on launching and mature programs; and lower amount of start-up costs in comparison to the level of start-up activity in Q2 2011. The Q2 2012 operating earnings for the Industrial segment was $15.0 million, a 2900% improvement from operating earnings of $0.5 million in Q2 2011. The Industrial operating earnings were predominantly driven by:margin improvements on the increased volumes in the access equipment market; and favourable mix towards higher margin sales; partially offset by launch costs associated with the energy programs. "We are delighted to register another record quarter in Q2 on both sales and earnings," said Linamar CEO Linda Hasenfratz. "Earnings growth is outpacing sales growth by a factor of 3, the Industrial segment continues to perform very well and we continue to see great improvements in ROCE and ROE. In addition with a solid quarter of free cash flow we continue to drive a very strong balance sheet at Linamar. Our launches are driving great growth in the near term, and our competitive strength and an opportunistic market is helping us build for long term sustainable growth at Linamar." DividendsThe Board of Directors today declared an eligible dividend in respect to the quarter ended June 30, 2012 of CDN$0.08 per share on the common shares of the company, payable on or after September 13, 2012 to shareholders of record on August 24, 2012.Risk and Uncertainties (forward looking statements)Linamar no longer provides a financial outlook. Certain information provided by Linamar in these unaudited interim financial statements, MD&A and other documents published throughout the year that are not recitation of historical facts may constitute forward-looking statements. The words "estimate", "believe", "expect" and similar expressions are intended to identify forward-looking statements. Persons reading this report are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar. Some risks and uncertainties may cause results to differ from current expectations. The factors which are expected to have the greatest impact on Linamar include but are not limited to (in the various economies in which Linamar operates): the extent of OEM outsourcing, industry cyclicality, trade and labour disruptions, pricing concessions and cost absorptions, delays in program launches, the Company's dependence on certain engine and transmission programs and major OEM customers, currency exposure, and technological developments by Linamar's competitors.A large proportion of the Company's cash flows are denominated in foreign currencies. The movement of foreign currency exchange rates against the Canadian dollar has the potential to have a negative impact on financial results. The Company has employed a hedging strategy as appropriate to attempt to mitigate the impact but cannot be completely assured that the entire exchange effect has been offset.Other factors and risks and uncertainties that could cause results to differ from current expectations are discussed in the MD&A and include, but are not limited to: fluctuations in interest rates, environmental emission and safety regulations, governmental, environmental and regulatory policies, and changes in the competitive environment in which Linamar operates. Linamar assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.Conference Call InformationQ2 2012 Conference Call Information Linamar will hold a conference call on August 8, 2012 at 5:00 p.m. EST to discuss its second quarter results. The numbers for this call are (647) 427-3383 (local/overseas) or (888) 424-9894 (North America) confirmation number 76899563, with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on August 8, 2012 and at www.sedar.com by the start of business on August 9, 2012. A taped replay of the conference call will also be made available starting at 6:00 p.m. on August 8, 2012 for seven days. The number for replay is (855) 859-2056, Conference ID 76899563. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.Audio only streaming of the conference call available. Please go to our website (www.linamar.com) and follow the link.Q3 2012 Conference Call Information Linamar will hold a conference call on November 14, 2012 at 5:00 p.m. EST to discuss its third quarter results. The numbers for this call are (647) 427-3382 (local/overseas) or (888) 424-9894 (North America) confirmation number 12303441, with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on November 14, 2012 and at www.sedar.com by the start of business on November 15, 2012. A taped replay of the conference call will also be made available starting at 11:00 p.m. on November 14, 2012 for seven days. The number for replay is (855) 859-2056, Conference ID 12303441. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.Audio only streaming of the conference call available. Please go to our website (www.linamar.com) and follow the link.Linamar Corporation (TSX:LNR) is a diversified global manufacturing Company of highly engineered products powering vehicles, motion, work and lives. The Company is made up of 2 operating segments - the Powertrain/Driveline segment and the Industrial segments which are further divided into 4 key divisions - Manufacturing, Driveline, Industrial Commercial Energy ("ICE") and Skyjack, all world leaders in the design, development and production of highly engineered products. The Company's Manufacturing and Driveline divisions focus on precision metallic components, modules and systems for engine, transmission and driveline systems designed for passenger vehicle markets. The ICE group concentrates on similar products for on and off highway vehicle, energy and other industrial markets. The Company's Skyjack division is noted for its innovative, high quality mobile industrial equipment, notably its class-leading aerial work platforms and telehandlers. With more than 16,800 employees in 39 manufacturing locations, 5 R&D centers and 15 sales offices in 12 countries in North America, Europe and Asia, Linamar generated sales of more than $2.8 Billion in 2011. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com.FOR FURTHER INFORMATION PLEASE CONTACT: Linda HasenfratzLinamar CorporationChief Executive Officer(519) 836-7550ORFrank HasenfratzLinamar CorporationChairman of the Board(519) 836-7550www.linamar.com