Superior Industries Records $14.2M Q3 Net Loss

Superior Industries International has announced a net loss of US$14.2 million for the third quarter of 2008, including a charge linked to the December closure of its factory in Pittsburg, Kansas. In the comparable quarter of 2007 Superior recorded a net loss of $739,000. Unit shipments decreased 29 per cent in the quarter, compared with the same period a year ago, and were at the lowest level since the third quarter of 1998.

According to the aluminium wheel manufacturer, third quarter demand was severely impacted by ‘various customer restructuring actions and market conditions’, including a significant reduction in the production of light trucks and SUVs, delaying the launch of key 2009 model-year light truck programmes, vehicle manufacturing rationalisation and realignment, and model mix changes designed to accelerate the movement toward more fuel-efficient passenger cars and crossover-type vehicles.

In light of an industry-wide reduction in demand for aluminium wheels, Superior announced in August it would close its manufacturing facility in Pittsburg and reduce its workforce by 755 positions. “Our strategic actions to date have been prudent and will result in long-term cost savings, improved capacity utilisation and a concentrated focus on optimising our operations,” said Steven Borick, chairman, CEO and president. “While we reacted quickly to conditions in our industry, we could not have predicted the magnitude of the drop in auto production, the continuing impact of an extremely weak economy, the significant tightening of consumer credit, or the impact of high fuel prices that has reduced demand, especially for SUVs and light trucks. As a result of these combined factors, we are actively pursuing additional cost saving initiatives designed to return the company to profitability.

“Unlike others in our industry, Superior’s balance sheet remains strong, which will help us to withstand these difficult times,” Borick added.

Consolidated net sales decreased 28 per cent to $163.4 million in the quarter. Shipments of light truck and SUV wheels decreased 51 per cent and shipments of passenger car wheels increased 11 per cent compared with the prior year. Average selling prices increased approximately 1 per cent compared with the prior year, as a 3 per cent increase in the pass-through price of aluminium was partially offset by a shift in sales mix to smaller diameter wheels.

Negative gross profit was $11.2 million, or (6.9) per cent of net sales, compared to gross profit of $5.3 million, or 2.3 per cent of net sales, for the third quarter of 2007. Substantially lower customer requirements during the 2008 third quarter resulted in wheel production decreasing 21 per cent versus the second quarter of 2008 and 25 per cent compared to the same period a year ago, significantly impacting absorption of plant fixed costs. This, along with lost margin on the decrease in unit shipments, contributed to the drop in gross profit. Severance costs related to the planned plant closure and workforce reductions totalled approximately $956,000 in the 2008 third quarter.

SG&A expenses decreased 20 per cent to $6.2 million, or 3.8 per cent of net sales, from $7.8 million, or 3.4 per cent of net sales, for the third quarter of 2007, which included a $2.2 million accrual for the potential settlement of a labour related lawsuit. Loss before income taxes and equity earnings from joint ventures was $19.8 million compared with loss before income taxes and equity earnings from joint ventures of $1.1 million for the third quarter of 2007.