Superior to build new plant, announces 2012 results
In addition to reporting its 2012 results, US-based aluminium wheel manufacturer Superior Industries International, Inc. has announced plans to build a new manufacturing facility in Mexico to expand capacity and meet anticipated growth in product demand.
The company’s net income for full-year 2012 amounted to US$30.9 million, or $1.13 per diluted share, compared with $67.2 million, or $2.46 per diluted share, in 2011. Superior says the net income decline largely reflected a “swing to income tax expense of $3.6 million in 2012 from a $25.2 million income tax benefit in 2011.”
Net sales for 2012 declined slightly to $821.5 million, from $822.2 million in 2011. A seven per cent increase in unit sales volume for 2012 was offset by a reduction in average selling price, primarily due to a decline in aluminium prices. Unit shipments rose to 12.5 million in 2012 from 11.7 million units shipped in the prior year.
Gross profit for 2012 declined to $60.6 million, or seven per cent of net sales, from $67.1 million, or eight per cent of net sales, in 2011. The 2012 gross profit included a $3.5 million non-cash benefit from resolution of a foreign consumption tax issue. The company said the decline in gross profit and margin percentage reflected the impact of higher levels of manufacturing costs, principally labour and maintenance. The increase in manufacturing cost resulted from higher sales volume, as well as equipment reliability and other challenges that reduced operating efficiencies, especially in the older US facilities. Superior reports continuing to operate its factories at high utilisation rates throughout the year.
“The opportunities and challenges in our business have clarified the next steps to improve our operating returns,” said Steven J. Borick, chairman, chief executive officer and president of Superior Industries. “Superior remains the premier aluminium wheel manufacturer in a healthy and growing North American automotive market. While our operations in Mexico consistently have performed at class-leading levels, it has been evident we are not currently positioned to participate fully in North American market growth. Accordingly, after a thorough evaluation of ways to deploy our capital, we have decided to expand our manufacturing footprint by constructing a new manufacturing facility in Mexico, where significant light vehicle assembly expansion has been announced or already is underway.”
Borick said Superior intends to invest approximately $125 million to $135 million to construct and equip the new manufacturing facility, which will have an initial annual production capacity of 2 million to 2.5 million wheels. He said a specific site within Mexico still is being identified, with groundbreaking targeted for around the middle of 2013 and completion of construction anticipated about two years later. Architectural plans currently are underway. Borick added that existing liquidity is adequate to fund the project, however the company is evaluating credit options.
In addition to erecting a new plant, Superior intends to make further enhancements to its existing operations in both the US and Mexico. Capital expenditures amounted to $23 million in 2012, more than a one-third increase over the prior year, and the company expects to increase the pace of reinvestment in its current factories in 2013 with a goal to improve process capability and operating efficiency, especially in the US. More than two-thirds of capital expenditures in 2012, or almost $16 million, were invested in the company’s older manufacturing facilities in the US, which supported just under 40 per cent of total unit sales volume for the past year.
“I am excited about this next milestone step for Superior and for our future prospects. We believe there are great opportunities to improve the company’s operating performance, which we believe should translate to enhanced shareholder value. We remain committed to retain our position as the premier aluminium wheel supplier to the North American automotive industry,” Borick added.