Ontario metal parts supplier Martinrea International Inc. posted a boost in net income and profit margins during the second quarter after taking one-time charges for closing a plant in Detroit a year ago.
Adjusted earnings grew 26 per cent to $47.3 million while the company's adjusted profit margin grew 2 percentage points to 11.2 per cent. Revenue declined 5 per cent to $972 million in part because of a $23 million reduction in tooling work, the company said.
The company said productivity and efficiency gains played a major role in the profit boost.
"Our launches have gone well, we continue to make productivity and efficiency improvements, our sales mix is improving and we had a slightly lower than expected tax rate," CFO Fred Di Tosto said in a statement.
Martinrea said its net income grew to $47.3 million compared with a loss of $42 million last year. The company took $38.3 million in one-time impairment and restructuring charges during the second quarter of 2016 -- most of it for a Detroit plant closing that stemmed from an early cancellation of a customer platform.
"This is now our eleventh quarter in a row with record year-over-year adjusted earnings," CEO Pat D'Eramo said in a statement. "Our margin improvement plan continues to be on track, and our leverage ratio continues to improve. It is pretty clear that we are meeting, indeed exceeding, our objectives for the year even in a flat automotive environment."
D'Eramo also announced new business contracts during the second quarter, expected to generate about $50 million. The three deals were:
- $15 million of aluminum structural components and fluid management systems work for Ford on the next-generation F-150 and new Bronco, both starting in 2020.
- $15 million of steel structural components for GM on an upcoming electric autonomous vehicle starting in 2018.
- $20 million of aluminum structural components for Lucid Motors starting in late 2019.
Martinrea, based in Vaughan, Ontario, ranks No. 70 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $2.95 billion U.S. during its 2016 fiscal year.