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USA: Remy International boosts Q3 operating income 5.3%

By just-auto.com editorial team | 5 November 2004

Automotive electrical and powertrain remanufacturer Remy International has reported operating income of $US22.2 million in the third quarter of 2004, up $1.1 million, or 5.3%, over Q3 2003.

Net sales increased $7.6 million, or 3.1%, to $254.3 million.

President and CEO Thomas Snyder said: "Our third quarter performance was in line with our expectations and reflects the continuing improvement in gross margins. This improvement comes in an environment of higher commodity costs, customer price reductions and the adverse effect of weak retail electrical sales. Our ability to offset these negatives reflects the substantial operating cost reductions we have put in place over the last 15 months."

For the first nine months of 2004, net sales increased $66.6 million, or 9.1%, to $795.3 million over the comparable period in 2003. Operating income of $69.1 million increased $55.0 million year on year. The result included restructuring charges of $1.5 million and $47.3 million that were recorded in the first nine months of 2004 and 2003, respectively.

For the nine months ended September 30, continued strong customer demand in the heavy-duty and industrial sectors, higher automotive OEM volume from new alternator business awards and improved remanufactured diesel engine and parts volume all contributed to the year over year sales growth, Remy said in a statement.

Savings resulting from the restructuring and other cost reduction actions taken in 2003, combined with strong sales growth, contributed to the year over year gross margin improvement.

Commenting on the remainder of 2004, Snyder said, "In the second half of the year we are experiencing softer industry sales and additional cost pressures. With our market wins and continued strong sales in the heavy duty [truck] class 8 and industrial markets, we expect that our fourth quarter sales, while lower than previously expected, will still be similar to the third quarter and will reflect an increase over the prior year."