Heroux-Devtek Inc. swung to a net loss in its latest quarter as the landing gear manufacturer felt the impact from severe turbulence in the global aerospace industry caused by the COVID-19 pandemic.
The Quebec-based company said it lost $1.3 million or four cents per share in its fiscal first quarter, down from a net profit of $6.4 million or 18 cents per share a year earlier.
Civil aviation sales plummeted by 26 per cent year over year to $50 million as twin-aisle aircraft deliveries dropped by nearly half amid the collapse of commercial air travel across the globe. However, defence sales rose by three per cent to $78 million.
Defence orders now comprise two-thirds of the company’s $772-million backlog, and “will allow us to weather the storm,” CEO Martin Brassard said in a statement.
“Our first quarter results were encouraging given this turbulent environment. We remained profitable and generated free cash flow that are helping us maintain a healthy balance sheet. The restructuring measures we announced in May are also proceeding according to plan,” he said.
The company announced in May it would cut 225 employees or 10 per cent of its workforce and close its business unit formerly known as Alta Precision as a response to the coronavirus.
More than 60 per cent of the staff reductions have been completed, with the remaining to come upon closure of the Alta Precision facility “near the end of the fiscal year,” the company said.
Revenues for the three months ended June 30 decreased 10.5 per cent to $128.3 million, from $143.4 million in the first quarter of 2019.
Adjusted profits were cut in half, reaching $3.38 million or nine cents per share, compared with $6.96 million or 19 cents per share in the prior year.
Heroux-Devtek was expected to earn five cents per share in net income and seven cents per share in adjusted profits on $129.8 million of revenues, according to financial markets data firm Refinitiv.
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