Intermet's Profits Climb In First Quarter Despite Lower Sales

Autoparts Report, April 20, 2002

Intermet Corp. said it has generated significantly higher first-quarter net income of $4.8 million, or 19 cents per diluted share, versus $0.8 million, or 3 cents per diluted share, in the year-earlier quarter. First- quarter 2002 net sales fell 8 percent to $206 million from first-quarter 2001 net sales of $224 million.

The decrease in net sales of $18 million was linked to two factors, the company said. First, $11 million was lost from the shutdown of a plant. Second, certain Intermet customers lost market share and, hence, production in the first quarter of 2002 versus the first quarter of 2001.

"Intermet has long recognized that some of its customers have lost market share, and that further market-share losses represented long-term risk," said Chairman and Chief Executive Officer John Doddridge. "To counter such risk, Intermet has aggressively pursued strategies designed to significantly broaden its revenue base and restore top-line growth. Expanding the customer base and broadening product offerings have been successful, especially with New American Manufacturers, such as Mitsubishi, Toyota and Honda."

Doddridge also noted that the company has executed aggressive programs designed to improve operating efficiencies across all manufacturing operations. "That Intermet has become a much leaner manufacturing enterprise was convincingly demonstrated in the first quarter," he said. "Gross profit increased year over year to $20.5 million from $17.3 million despite an $18 million reduction in net sales. Higher gross profit on lower sales is a direct reflection of an improved cost structure and improved fundamental earning power."

Doddridge added that Intermet continues to improve manufacturing efficiencies. "The company operates very lean, and is capable of delivering good operating-income metrics even at relatively low capacity-utilization rates. Operating leverage is high at Intermet, and the company is well positioned to achieve strong earnings growth and higher returns if the economic recovery that seems to be surfacing is sustained.