Superior Industries’ Net Income Increased in Q1

Supplier of OE alloy wheels, Superior Industries International, have announced a decrease in net sales for the quarter period to March 31, 2008, but despite this a marked increase in net income. Net income, at US$3.71 million, delivered a result of $0.12 per diluted share compared to net income of $0.08 per diluted share for the first quarter of 2007. Commenting on these results, company chairman and CEO Steven Borick said: “The benefits of our hard work these past few years to optimise our manufacturing performance have continued into 2008. Reflecting our continued progress in improving production efficiencies in our plants, we delivered sharply higher gross margin for this year’s first quarter versus the prior year despite the impact of the American Axle strike on our shipments to GM.”

For the three months ended March 31, 2008, consolidated net sales decreased 9.2 per cent to $222,238,000 compared to $244,875,000 for the first quarter of 2007, primarily reflecting a 9.8 per cent decrease in unit wheel shipments. Average selling prices increased less than one per cent compared to the prior year, mainly due to a higher percentage of larger diameter wheels in the sales mix, which offset a 3.5 per cent decrease in the aluminium portion of selling prices.

Gross profit more than quadrupled to $9,386,000, or 4.2 per cent of net sales, during the first quarter of 2008. This compares to gross profit of $2,145,000, or 0.9 per cent of net sales, for the first quarter of last year. The higher gross margin in 2008 was accomplished despite a 13.1 per cent decrease in total production compared to a year ago.

“The impact of the American Axle strike on our shipments to GM was directly responsible for just over half of the decrease in unit wheel shipments and approximately 40.0 per cent of the decrease in units produced for this year’s first quarter versus the same period a year ago,” said Borick. “We estimate that without the strike, gross margin would have been closer to the 5.0 per cent reported for the fourth quarter of 2007.”

Equity in earnings of the company’s joint venture aluminium wheel manufacturing facility in Hungary was $2,085,000 for the first quarter of 2008 compared to $791,000 for the same period a year earlier. The increased profitability was due principally to a 9.2 per cent increase in unit shipments and to lower raw material costs compared to a year ago. The increase in the value of the euro compared to a year ago also contributed $265,000 to the higher equity earnings in 2008. “With market conditions just as competitive in Europe as in the US, this increase is especially noteworthy,” Borick commented.

Company net income for the first quarter of 2008 was $3,179,000, or $0.12 per diluted share. This compares to net income for the first quarter of 2007 of $2,051,000, or $0.08 per diluted share. At March 31, 2008, working capital was $271,718,000, including cash and cash equivalents of $105,204,000. At March 31, 2007, working capital was $243,512,000, including cash and cash equivalents of $58,629,000. Superior Industries reports it has no debt.