Linamar Corporation
TSX : LNR

Linamar Corporation

March 05, 2008 16:00 ET

Linamar Announces Fourth Quarter Results

GUELPH, ONTARIO--(Marketwire - March 5, 2008) - Linamar Corporation (TSX:LNR) is a diversified global manufacturing company of highly engineered products. The company's Powertrain and Driveline focused divisions are world leaders in the collaborative design, development and manufacture of precision metallic components, modules and systems for global vehicle markets. The company's Industrial division is a world leader in the design and production of innovative mobile industrial products, notably its class-leading aerial work platforms. With close to 12,000 employees in 37 manufacturing locations, 5 R&D centers and 10 sales offices in Canada, the US, the UK, Mexico, Germany, Sweden, Hungary, China, Korea and Japan Linamar generated sales of over $2.3 Billion in 2007. For more information about Linamar Corporation and its industry leading products and services, visit www.linamar.com.



(CDN dollars in thousands except per share figures)

Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
---------------------------------------------------------------------------
$ $ $ $

Sales 528,180 543,611 2,313,551 2,262,130
Gross Margin 52,765 61,543 288,182 270,013
Operating Earnings(1) 25,002 35,677 172,160 158,438
Earnings from Continuing
Operations 25,063 31,908 108,987 105,335
Net Earnings 25,407 26,806 109,331 99,533
---------------------------------------------------------------------------
Diluted Earnings per Share
from Continuing Operations 0.36 0.46 1.56 1.48
Diluted Earnings per Share 0.36 0.38 1.57 1.40
---------------------------------------------------------------------------

Certain unusual items affected earnings in both 2007 and 2006 as noted in
the table below:

(1) "Operating earnings", as used by the chief operating decision makers
and management, monitors the performance of the business specifically at
the segmented level. Operating earnings is calculated by the company as
gross margin less selling, general and administrative expenses.

Three Months Ended Year Ended
December 31 December 31
2007 2006 2007 2006
---------------------------------------------------------------------------
$ $ $ $

Gross margin 52,765 61,543 288,182 270,013
Selling, general and
administrative 27,763 25,866 116,022 111,575
---------------------------------------------------------------------------
Operating earnings 25,002 35,677 172,160 158,438
---------------------------------------------------------------------------

Under Canadian generally accepted accounting principles ("GAAP"), this
financial measure does not have a standardized meaning and is unlikely to
be comparable to similar measures presented by other issuers.



Three Months Ended Year Ended
December 31 December 31
(in millions of
dollars,except per
share figures) 2007 2006 2007 2006
---------------------------------------------------------------------------

Earnings from Continuing
Operations $25.1 $31.9 $109.0 $105.3

Adjustments due to
one-time items
(after tax)
---------
Rate changes on future income
taxes in Canada (6.8) (2.0) (6.8) (5.5)

Utilization of previously
unrecorded future income tax
assets - (4.8) (0.2) (4.8)

Recognition of future
Hungarian tax
credits - (5.9) - (5.9)

Reduction of valuation
allowance against tax benefit
of loss carryforwards - (2.1) - (2.1)

Foreign Exchange loss (gain)
on Hungarian Forints
held in Escrow (1.0) - 3.0 -

Ontario Automotive Investment
Strategy - "OAIS" 2005/2006
Recovery - - (4.3) -

-------------------------------------------
Adjusted Earnings From
Continuing Operations $17.3 $17.1 $100.7 $87.0
-------------------------------------------
As a percentage of Sales 3.3% 3.1% 4.4% 3.8%
Change over Prior Year 1.2% 15.7%
Earnings per Share $0.25 $0.24 $1.44 $1.22


Fourth Quarter Operating Highlights

Sales for the fourth quarter of 2007 declined 2.8% to $528.2 million, compared to $543.6 million for the fourth quarter of 2006. 2007 sales increased $51.5 million to $2,313.6 million compared to $2,262.1 million for the same period in 2006.

The Industrial Segment ("Industrial") product sales increased 25.7% or $105.9 million for the year. Adjusting for the stronger Canadian dollar versus the U.S. dollar and other currencies, sales would otherwise have increased by $122.2 million or 29.7% . The increase in Industrial product sales has been predominantly driven by global market demand for aerial work platforms(2) and telehandlers produced by Skyjack Inc. ("Skyjack") (a subsidiary of the company) and a product diversification strategy executed during the year.

(2) During 2007, Skyjack began selling Booms. Accordingly the definition of aerial work platforms now includes these products.

Sales for the Powertrain/Driveline Segment ("Powertrain/Driveline") declined by $54.4 million, or 2.9% for the year. Adjusting for the effect of the stronger Canadian dollar compared with the U.S. dollar and other currencies in 2007, sales would otherwise have decreased by $19.4 million, or 1.0%. The sales decline was expected and largely due to the substantial pre-buy activity in 2006 in the medium/heavy duty truck market related to an emissions regulation change which took effect January 1, 2007 significantly affecting the year over year comparison. The segment's results were also affected by plant shutdowns and production reductions by North American original equipment manufacturers ("OEMs"), increased pricing pressure from these same customers, the maturation or re-sourcing of some contracts, partially offset by the ramping up of new programs, strong growth in Europe and continuing ramp up of our Asian operations.

Operating earnings in the fourth quarter of 2007 decreased $10.7 to $25.0 million, compared to $35.7 million for the same period last year. Operating earnings for the fiscal year 2007 were $172.2 million which represents an increase of 8.7% compared to 2006 operating earnings of $158.4 million.

Increased market share in the aerial work platform market, helped 2007 operating earnings for Industrial to increase $12.2 million (22.2%) over 2006 to $67.1 million.

Operating earnings for Powertrain/Driveline were higher year over year by $1.6 million (1.5%) in 2007 to $105.1 million. The segment did experience improved results in Europe and new business in North America but these improvements were mainly offset by significant operating earnings pressures due to non-variable cost burdens in North America and ongoing start-up costs in Asia-Pacific.

Dividends

The Board of Directors today declared an ELIGIBLE dividend in respect to the quarter ended December 31, 2007 of CDN$0.06 per share on the common shares of the company, payable on or after March 31, 2008 to shareholders of record on March 21, 2008.

Risk and Uncertainties (forward looking statements)

Linamar no longer provides a financial outlook.

Certain information provided by Linamar in these unaudited interim financial statements, MD&A and other documents published throughout the year that are not recitation of historical facts may constitute forward looking statements. The words "estimate", "believe", "expect" and similar expressions are intended to identify forward-looking statements. Persons reading this report are cautioned that such statements are only predictions and the actual events or results may differ materially. In evaluating such forward-looking statements, readers should specifically consider the various factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements.

Such forward-looking information may involve important risks and uncertainties that could materially alter results in the future from those expressed or implied in any forward-looking statements made by, or on behalf of, Linamar. Some risks and uncertainties may cause results to differ from current expectations. The factors which are expected to have the greatest impact on Linamar include but are not limited to (in the various economies in which Linamar operates): the extent of OEM outsourcing, industry cyclicality, trade and labour disruptions, pricing concessions and cost absorptions, delays in program launches, the company's dependence on certain engine and transmission programs and major OEM customers, currency exposure, and technological developments by Linamar's competitors.

A large proportion of the company's sales are denominated in U.S. dollars and the company also purchases a significant amount of raw materials, supplies and equipment in U.S. dollars. The strengthening of the Canadian dollar has the potential to have a negative impact on financial results. The company has employed a hedging strategy as appropriate to attempt to mitigate the impact but cannot be completely assured that the entire exchange effect has been offset.

Other factors and risks and uncertainties that could cause results to differ from current expectations are discussed in the MD&A and include, but are not limited to: fluctuations in interest rates, environmental emission and safety regulations, governmental, environmental and regulatory policies, and changes in the competitive environment in which Linamar operates. Linamar assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements.

Conference Call Information

Linamar will hold a conference call on March 5, 2008 at 5:00 p.m. EST to discuss its fourth quarter and year end results. The numbers for this call are (416) 642-5212 (local/overseas) or (866) 321-6651 (North America), with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's full quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on Wednesday, March 5, 2008, and at www.sedar.com by the start of business on March 6, 2008. A taped replay of the conference call will also be made available starting at 11:00 p.m. on March 5, 2008 for seven days. The number for replay is (647) 436-0148 or (888) 203-1112, Conference ID 9842673. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Linamar will hold a conference call on May 7, 2008 at 5:00 p.m. EST to discuss its first quarter. The numbers for this call are (416) 642-5212 (local/overseas) or (866) 321-6651 (North America), with a call-in required 10 minutes prior to the start of the conference call. The conference call will be chaired by Linda Hasenfratz, Linamar's Chief Executive Officer. A copy of the company's full quarterly financial statements, including the Management's Discussion & Analysis will be available on the company's website after 4 p.m. EST on Wednesday, May 7, 2008 and at www.sedar.com by the start of business on May 8, 2008. A taped replay of the conference call will also be made available starting at 11:00 p.m. on May 7, 2008 for seven days. The number for replay is (647) 436-0148 or (888) 203-1112, Conference ID 1944408. The conference call can also be accessed by web cast at www.linamar.com, by accessing the investor relations/events menu, and will be available for a 7 day period.

Frank Hasenfratz, Chairman of the Board

Linda Hasenfratz, Chief Executive Officer

Contact Information

  • Linamar Corporation
    Linda Hasenfratz
    (519) 836-7550
    Website: www.linamar.com