- Sales increase 6.6% over the third quarter of 2011 (“Q3 2011”) to reach $773.4 million;
- Net earnings up 56.8% over Q3 2011 to reach $33.7 million;
- EPS is up 57.6% over Q3 2011 to reach $0.52;
- New business wins continue to be strong, launch book at close to $2.4 billion;
- Industrial segment sales up 14.2% and operating earnings up 153.3%;
- Powertrain/Driveline segment sales up 5.5% and operating earnings up 4.9%;
- Return on Capital Employed improved by 26.3% from Q3 2011 to reach 12.4%;
- Return on Equity increased 44.6% from Q3 2011 to 13.5%; and
- Total Debt levels reduced and Debt to Total Capitalization continues to improve reaching 40.1% since Q2 2012
Operating Highlights
Sales for the third quarter of 2012 (“Q3 2012”) were $773.4 million, up $47.8 million from $725.6 million in Q3 2011.
Sales for the Powertrain/Driveline segment increased by $35.1 million, or 5.5% in Q3 2012 to $671.4 million compared to $636.3 million in Q3 2011. The sales increase in the third quarter was impacted by:
- additional sales from new and expanded facilities;
- higher volumes on increased consumer demand in theUS;
- significant levels of newly launched programs in each ofCanada,MexicoandAsiafrom the Company’s substantial book of launch business; offset by:
- decreased consumer demand inEurope.
Industrial segment sales increased 14.2%, or $12.7 million from Q3 2011 to $102.0 million. The sales increase was:
- primarily due to increases in demand in the access equipment markets resulting from fleet replacement initiatives;
- increases in demand in the agricultural equipment markets serviced by the European Fabrication Division; and
- to a lesser extent due to increases in the energy programs that were awarded and now have started to launch.
The company’s operating earnings for Q3 2012 were $47.9 million. This compares to adjusted operating earnings of $41.2 million in Q3 2011, an increase of $6.7 million.
Q3 2012 operating earnings of $47.1 million for the Powertrain/Driveline segment were higher by $4.4 million from adjusted operating earnings of $42.7 million in Q3 2011. The segment experienced the following in Q3 2012:
- improved margins as production volumes increased on launching and mature programs;
- lower amount of start-up costs in comparison to the level of start-up activity in Q3 2011; and
- the bargain purchase gain recognized on the Famer Group acquisition in Q3 2011.
The Q3 2012 operating earnings for the Industrial segment were $0.8 million, a 153.3% improvement from operating losses of $1.5 million in Q3 2011. The Industrial operating earnings were predominantly driven by:
- margin improvements on the increased volumes in the access equipment market;
- margin improvements on the increased volumes in the agricultural equipment markets; and
- a favourable mix towards higher margin sales; partially offset by:
- the weakening US dollar and EUR against other currencies in the quarter compared to the same period in 2011 that resulted in a foreign exchange loss in Q3 2012 as compared to a foreign exchange gain in Q3 2011;
- continued investment in labour and fixed overhead costs at Skyjack to support the future growth in the market; and
- to a lesser extent, launch costs associated with the energy programs.
“We are very pleased to see another strong quarter in Q3 in both sales and earnings growth,” said Linamar CEO Linda Hasenfratz. “Earnings growth continues to outpace sales growth by a significant factor, leverage ratios continue to improve and we continue to see great improvements in ROCE and ROE. Our substantial launch book is 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.”
