BRANTFORD, ONTARIO -- (Marketwire) -- 08/11/11 -- Wescast Industries Inc. (TSX: WCS.A) today reported 2011 second quarter sales of $71.4 million and a net loss of $1.1 million.
(In thousands of Canadian dollars, except per share amounts) Three Months Ended Six Months Ended July 3, 2011 June 27, 2010 July 3, 2011 June 27, 2010 Sales 71,411 71,069 143,017 134,026 Gross profit 5,345 8,840 15,037 23,522 Net (loss) earnings (1,126) (1,376) 280 6,935 Diluted net (loss) earnings per share (0.09) (0.10) 0.02 0.52 Cash derived from (applied to) operations 2,883 5,339 (4,143) 5,825
The information presented in this news release is in accordance with International Financial Reporting Standards ("IFRS"). Accordingly, the comparative information provided for the three months and six months ended June 27, 2010 has been restated from Canadian GAAP to IFRS.
-- The Company has booked $61.5 million of average annualized new and replacement business globally in the first six months of 2011 which the Company expects will positively impact our results in the future. In North America, 13 programs were launched in the first six months of the year, with another 8 programs in Europe and 12 in Asia, for a total of 33 programs. A further 28 programs are in pre-launch phase with production starts scheduled for 2011 through to 2013. -- The Company reported consolidated sales of $71.4 million, consistent with the $71.1 million reported in the second quarter of 2010, reflecting higher sales generated by the Company's European and Asian business units and lower sales in North America. The Company's European and Asian business units continue to launch many new programs and ship a higher number of both cast and machined parts resulting in a positive impact on each of those business units compared to the second quarter of 2010 -- The Company reported gross profit of $5.3 million for the second quarter compared to gross profit of $8.8 million for the same period last year. The decline was partially due to lower casting and machining volumes in North America compared to the second quarter of 2010 with the balance related to operational performance with the significant number of new programs launched. The new launch activity in North America which has lead to the expansion of our machining capabilities in our Michigan operations, resulted in labour inefficiencies and incremental costs associated with training. Our European and Asian business units also experienced higher labour and production costs associated with the continuation of the new programs they are launching. While these have had a negative impact on the quarter, the longer term effect of the continued growth should be positive. -- Included in gross profit in the six months ended June 27, 2010 was a $7.7 million curtailment gain related to an amendment made to one of the Company's unfunded retiring allowance plans. This gain was recorded in cost of sales. There was no such gain reported in the first six months of 2011. The Company reported a second quarter net loss of $1.1 million compared with a net loss of $1.4 million reported in 2010. The net loss per share on a diluted basis was $0.09, compared with a net loss of $0.10 reported in the second quarter of 2010. -- Included in the net loss for the quarter was share-based payments expense of $1.2 million (2010 - $3.0 million) and expenses of $0.6 million (2010 - $nil) related to a review of strategic alternatives with the objective of enhancing shareholder value. The share-based payments expense for the quarter was due mainly to the significant increase in the Company's share price during the quarter. The combined negative impact on the diluted net loss per share for the quarter was $0.14. -- Over the course of the past eight months, the Company has been investing in the expansion of its material capabilities in Europe and China to include NiResist and stainless steel, and has begun the expansion of its stainless steel facility in Stratford Ontario to more than double its previous capacity. All projects are on track and on budget and will position the Company to continue its diversification into higher temperature alloys and new higher growth products.
The Company's entire quarterly financial statements and Management's Discussion and Analysis will be available at www.sedar.com by the start of business on August 12, 2011.
Wescast Industries Inc. is a global automotive parts supplier that designs, engineers, casts, machines and assembles high quality engineered exhaust system components, including exhaust manifolds, turbocharger housings and integrated turbomanifolds, as well as various other components for the car and light truck markets. The Company supplies to a diversified group of global original equipment manufacturers ("OEMs") and Tier 1 customers in North America, Europe, Asia, Africa, South America and Australia. The Company employs approximately 2,000 people in its regionally-based operations and sales and design centres in Canada, the United States, Hungary, China, Germany, Japan, the United Kingdom and France.
Learn more at www.wescast.com.
Forward Looking Statements
The contents of this news release contain statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking statements based on certain assumptions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements may include financial and other projections as well as statements regarding Wescast's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "estimate", "intend", "plan", "forecast", "project" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this news release are cautioned that such statements are only predictions, and that Wescast's actual future results or performance may be materially different.
This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties principally relate to the risks associated with the automotive industry and include, but are not limited to: our operating and/or financial performance, including the effect of new accounting standards on our reported financial results, fluctuations in interest rates, changes in consumer and business confidence levels, consumers' personal debt levels, vehicle prices, the extent and nature of purchasing or leasing incentive campaigns offered by automotive manufacturers, environmental emission regulations, fuel prices and availability, the continuation and extent of outsourcing by automotive manufacturers, changes in raw material and other input costs, our ability to continue to meet customer specifications relating to product performance, cost, quality, delivery and service, industry cyclicality or seasonality, trade and/or labour issues or disruptions, customer pricing pressures, pricing concessions and cost absorptions, actual levels of program production volumes by our customers compared to original expectations, including program cancellations or delays, dependence on certain engine programs and the market success and consumer acceptance of the vehicles into which such powertrain products are installed, our relationship with and dependence on certain customers, currency exposure, failures in implementing Wescast's strategy, technological developments by Wescast's competitors and customers, government and regulatory policies and changes in the competitive environment in which Wescast operates.
Wescast does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by law.
Wescast Industries Inc.
Chief Financial Officer