Hayes Lemmerz Tightens its Belt

Hayes Lemmerz International, Inc’s second quarter results show that the company has felt the consequences of increased steel and iron prices and lowered OEM production requirements in North America. The company reported a net loss of $10 million or 26 cents a share, for the second quarter. During the first half of 2004 the company accumulated net losses of $12.7 million or 34 cents a share.

Despite the disappointments the company reported that second quarter sales actually rose four per cent to $523.7 million compared with $502.8 million a year earlier. Sales for the six months ended 31 July 2004 totaled $1117.8 million compare with $1018.1 a 10 per cent increase on the previous year’s figures. The company reported a cash balance of $49.1 million and no borrowing under its $100 million revolving credit facility.

Hayes Lemmerz’s management are still upbeat. “I am encouraged by our continuing progress in making Hayes Lemmerz more cost-efficient and customer-focused in our operations,” said Curtis Clawson, chairman, president, and CEO. “Given the challenges faced by our industry, including sharply higher steel costs and soft new vehicle sales, we did well in the second quarter. For the first half of 2004, we slightly increased earnings from operations excluding fresh start accounting adjustments and reorganization items.”

Mr Clawson was careful to warn that Hayes Lemmerz will continue to face high materials costs, and also the impacts of new global competitors, especially in China. “Our industry remains under intense pricing pressure from competitors, and from our major customers. Fortunately, our intense focus on reduction in production costs, facility improvements, and increased productivity is allowing us to respond effectively to those pressures,” he said.