Wescast Industries Inc.
TSX : WCS.A

Wescast Industries Inc.

May 05, 2008 15:36 ET

Wescast Reports First Quarter Results

BRANTFORD, ONTARIO--(Marketwire - May 5, 2008) - Wescast Industries Inc. (TSX:WCS.A) today reported 2008 first quarter sales of $81.9 million and a net loss of $2.5 million.

Highlights

- The Company officially opened its integrated foundry and machining operation located in Wuhan, Hubei Province, China on April 8. The plant was completed on time and on budget. The integrated foundry and machining facility was commissioned in the fourth quarter of 2007 and began operations during the first quarter of 2008. The Company is currently manufacturing a small volume of production parts for customers in Asia and is ramping up a number of new global programs. During the first quarter, pre-launch expenditures represented a net loss of $1.7 million, compared to $0.6 million in 2007, and the operation incurred $1.5 million of capital expenditures.

- The Company reported consolidated sales of $81.9 million, a decline of 21.2% compared to the $104.0 million reported in the first quarter of 2007, reflecting significantly lower sales generated by the Company's North American and European operations. The level of sales generated in North America was negatively impacted by a softening of the light vehicle market and reduced requirements of General Motors due to the strike at auto parts supplier American Axle and Manufacturing Holdings Inc.

- The Company reported a net loss of $2.5 million for the quarter compared with net earnings of $3.1 million reported in the first quarter of 2007.

- The first quarter net loss per share on a diluted basis was $0.19, compared with net earnings per share of $0.23 reported in the first quarter of 2007.

- The North American automotive industry experienced an 8.3% decline in light vehicle production levels in the first quarter of 2008 compared to the first quarter of 2007. However, the Company's primary North American customer base, the Detroit 3 automakers, experienced a more significant decline of 13.4% in light vehicle production levels over the same period.

Operations

Consolidated Sales

Consolidated sales for the quarter were $81.9 million, a 21.2% decrease compared to the previous year's level of $104.0 million. The consolidated sales are net of inter-segment sales of $0.6 million between the Company's North American, European and Asian business units. The sales analysis presented for the North American and European business units is based on gross sales.

Consolidated prototype and tooling sales in the first quarter were $1.6 million, down from the $4.9 million recorded in the first quarter of 2007, reflecting a decline in the number and timing of new customer programs.

North American Sales

North American sales, excluding prototype and tooling sales, declined by 23.0% to $56.8 million compared to $73.8 million reported in the same quarter last year. The Company experienced a quarter-over-quarter decline of 19.6% in unit casting sales volume in North America. Machining volumes were down 18.1% compared to the first quarter of 2007.

The unit volume and sales decline resulted from:

- Lower sales with General Motors due to a reduction in their manifold requirements as a result of the strike at auto parts supplier American Axle;

- A reduction in light truck volume requirements of the Detroit 3 automakers, due in part to high fuel prices; and

- The impact of sales price reductions, changes in product mix and foreign exchange, as the Canadian dollar was significantly stronger against the US dollar compared to the same quarter last year.

European Sales

Sales generated by the Company's operation in Europe, excluding prototype and tooling sales, were $23.8 million for the quarter compared to $27.5 million during the same quarter last year. The operation experienced a quarter-over-quarter decline in casting unit sales volume of 4.1% . Total units machined were 5.0% lower than the first quarter of 2007. The decline in unit volume and sales was attributable to lower requirements from Ford due to a temporary shutdown at one of their plants during the quarter; and the delayed implementation of a particular high-volume part that has been re-designed but not yet approved at another customer. Changes in product mix and sales price reductions had a negative impact on the level of sales compared to the first quarter of 2007. Also, poor operating performance due to equipment downtime had a negative impact on the level of shipments.

Consolidated Earnings (Loss)

The Company reported a net loss of $2.5 million for the first quarter, compared with net earnings of $3.1 million reported in the same quarter last year.

North American Earnings

The Company's North American operations reported net earnings of $41 thousand, compared to net earnings of $2.4 million reported in the first quarter of 2007.

The main factors which contributed to the decline in net earnings from 2007 to 2008 were:

- Lower casting and machining volumes and changes in product mix that reduced gross profit compared with the first quarter of 2007;

- Sales price reductions and foreign exchange; and

- Higher raw material prices compared with 2007.

The impact from these factors was partially offset by the positive benefits from:

- Improved operating performance of the manufacturing facilities as a result of higher equipment uptime and more effective labour utilization;

- Lower depreciation expense, specifically of the machining operations; and

- Lower external consulting costs and lower administrative payroll costs.

European Earnings (Loss)

The Company's European operations generated a net loss of $0.9 million during the quarter compared to net earnings of $1.2 million reported in the same period in 2007.

The decline in the profitability of the European operation was due to:

- Lower casting and machining volumes compared to the first quarter of 2007;

- Sales price reductions and changes in product mix;

- Lower prototype casting margins realized during the first quarter compared to 2007;

- Higher raw material and electricity pricing and increased labour costs; and

- Increased maintenance costs required due to equipment downtime experienced during the quarter.

The negative impact from the above factors was partially offset by lower external consulting costs compared to the first quarter of 2007.

A more detailed discussion of the consolidated results for the quarter ended March 30, 2008 is contained in the attached Management's Discussion and Analysis which follows the interim consolidated financial statements and the notes thereto.

About Wescast

Wescast Industries Inc. is the world's leading supplier of cast iron exhaust manifolds for passenger cars and light trucks. The Company designs, casts, machines and assembles iron exhaust system components for automotive original equipment manufacturers ("OEMs") and Tier 1 customers for the car and light truck markets in North America, Europe and Asia. The Company employs approximately 1,900 people in 7 production facilities and 5 sales and design centres in Canada, Hungary, the United States, Germany, Japan and China. The Company also has sales and technical design representation in the United Kingdom and France. The Company is recognized worldwide for its quality products, innovative design solutions and highly committed workforce.

Learn more at www.wescast.com.

Forward Looking Statements

The contents of this news release contain statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking statements based on certain assumptions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements may include financial and other projections as well as statements regarding Wescast's future plans, objectives or performance for the current period and subsequent periods. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "estimate", "intend", "plan", "forecast", "project" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this news release are cautioned that such statements are only predictions, and that Wescast's actual future results or performance may be materially different.

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties principally relate to the risks associated with the automotive industry and include, but are not limited to: our operating and/or financial performance, including the effect of new accounting standards on our reported financial results, fluctuations in interest rates, changes in consumer and business confidence levels, consumers' personal debt levels, vehicle prices, the extent and nature of purchasing or leasing incentive campaigns offered by automotive manufacturers, environmental emission regulations, fuel prices and availability, the continuation and extent of outsourcing by automotive manufacturers, changes in raw material and other input costs, our ability to continue to meet customer specifications relating to product performance, cost, quality, delivery and service, industry cyclicality or seasonality, trade and/or labour issues or disruptions, customer pricing pressures, pricing concessions and cost absorptions, actual levels of program production volumes by our customers compared to original expectations, including program cancellations or delays, price reduction pressures, dependence on certain engine programs and the market success and consumer acceptance of the vehicles into which such powertrain products are installed, our relationship with and dependence on certain customers, currency exposure, failures in implementing Wescast's strategy, technological developments by Wescast's competitors, government and regulatory policies and changes in the competitive environment in which Wescast operates.

Wescast does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events, except as required by law.



A conference call has been arranged for:

May 6, 2008 3:00 p.m. EST
To participate, please dial: North America 1-888-300-0053;
International 1-647-427-3420. Conference ID# 43180670 (required).
Investors can also listen to the live conference call by webcast by
visiting www.wescast.com and accessing the link on our homepage.
Call back is available from May 6, 2008 to May 13, 2008, to access
please dial 1-888-562-2818 (International: 1-402-220-7736) and enter
pass code 43180670.



Wescast Industries Inc.
Consolidated Statements of Earnings and Retained Earnings
(in thousands of Canadian dollars, except per share amounts) (Unaudited)


Three months ended
------------------------------
March 30, 2008 April 1, 2007

------------------------------

Sales $81,948 $104,048
Cost of sales 77,186 90,584
------------------------------

Gross profit 4,762 13,464
Selling, general and administration 5,109 7,582
Research, development and design 2,433 1,605
------------------------------

(2,780) 4,277

Other (income) expense
Interest expense 142 200
Investment income (87) (108)
Other (276) (642)
------------------------------
(221) (550)
------------------------------

Earnings (loss) from continuing operations
before income taxes (2,559) 4,827
Income taxes (37) 1,730
------------------------------

Earnings (loss) from continuing operations (2,522) 3,097
Net loss from discontinued operations - (42)
------------------------------

Net earnings (loss) ($2,522) $3,055
------------------------------
------------------------------

Earnings (loss) from continuing operations
per share (Note 6)
- Basic and diluted ($0.19) $0.24
------------------------------
------------------------------

Net earnings (loss) per share (Note 6)
- Basic and diluted ($0.19) $0.23
------------------------------
------------------------------

Retained earnings, beginning of period $243,368 $258,068
Accounting change (Note 2) 680 -
Net earnings (loss) (2,522) 3,055
Dividends paid - (788)
------------------------------
Retained earnings, end of period $241,526 $260,335
------------------------------
------------------------------



Wescast Industries Inc.
Consolidated Statements of Comprehensive Income
(in thousands of Canadian dollars) (Unaudited)


Three months ended
-----------------------------
March 30, 2008 April 1, 2007
-----------------------------

Net earnings (loss) ($2,522) $3,055

Other comprehensive income, net of
income taxes:

Change in unrealized gains on translating
financial statements of self-sustaining
foreign operations 10,466 3,078

Reclassification to earnings of losses
on cash flow hedges (59) -

Change in unrealized gains on derivative
instruments designated as cash flow hedges (328) -
-----------------------------

Comprehensive income $7,557 $6,133
-----------------------------
-----------------------------



Wescast Industries Inc.
Consolidated Balance Sheets
(in thousands of Canadian dollars) (Unaudited)


As at
March 30, 2008 December 30, 2007
---------------------------------

Assets
Current
Cash $5,375 $16,386
Accounts receivable 60,302 62,985
Inventories (Notes 2 and 3) 40,585 33,128
Prepaid expenses 2,468 1,790
Future income taxes 1,050 1,050
Credit facility fees 524 -
---------------------------------

110,304 115,339

Property, plant and equipment 297,394 293,187

Future income taxes 33,195 32,637

Assets held for sale 2,749 2,749

Other assets 301 455
---------------------------------

$443,943 $444,367

---------------------------------
---------------------------------

Liabilities and Shareholders' Equity
Current
Accounts payable and accrued
liabilities $40,516 $44,292
Income taxes payable 6,690 13,314
Current portion of long-term debt 3,613 3,143
Future income taxes 259 131
---------------------------------

51,078 60,880

Long-term debt 2,720 2,627

Deferred government assistance 2,694 2,529

Future income taxes 8,818 8,752

Employee benefits 22,646 21,873
---------------------------------

87,956 96,661
---------------------------------

Shareholders' Equity
Capital stock (Note 4) 110,955 110,937
Retained earnings 241,526 243,368
Share purchase loans (106) (132)
Accumulated other comprehensive income
(loss) (Note 5) 3,612 (6,467)
---------------------------------

355,987 347,706
---------------------------------

$443,943 $444,367
---------------------------------
---------------------------------



Wescast Industries Inc.
Consolidated Statements of Cash Flows
(in thousands of Canadian dollars) (Unaudited)



Three months ended
------------------------------
March 30, 2008 April 1, 2007

------------------------------
Cash derived from (applied to):
Operating
Earnings (loss) from continuing operations ($2,522) $3,097
Add (deduct) items not affecting cash:
Depreciation and amortization 8,261 9,049
Unrealized exchange (gain) loss on
future income tax assets (1,265) 382
Future income taxes 782 879
Gain on disposal of equipment (3) (109)
Deferred government assistance (87) (16)
Employee benefits, net of payments 775 660
------------------------------

5,941 13,942
Change in non-cash operating working
capital (Note 7) (12,786) (13,720)
------------------------------
(6,845) 222
Discontinued operations - (40)
------------------------------
(6,845) 182
------------------------------

Investing
Purchase of property, plant and
equipment and other assets (3,368) (9,284)
Proceeds on disposal of equipment 66 895
Discontinued operations - 47
------------------------------
(3,302) (8,342)
------------------------------

Financing
Issue of long-term debt 322 1,141
Payments of long-term debt principal (31) (601)
Payment of credit facility fees (524) -
Payments under capital lease obligations - (5)
Issuance of common shares 18 25
Employee share purchase loan payments 26 -
Dividends paid - (788)
------------------------------

(189) (228)
------------------------------

Effect of exchange rate changes on cash (675) 490
------------------------------

Net decrease in cash (11,011) (7,898)

Cash
Beginning of period 16,386 16,071
------------------------------
End of period $5,375 $8,173
------------------------------
------------------------------



Wescast Industries Inc.
Notes to the Consolidated Financial Statements
(in thousands of Canadian dollars, except per share amounts) (Unaudited)


Note 1. Basis of presentation

The unaudited interim consolidated financial statements ("interim financial statements") have been prepared following the same accounting policies as set out in the annual consolidated financial statements for the year ended December 30, 2007 included in the Company's 2007 Annual Report to Shareholders, except as noted below.

These are interim financial statements and as such the disclosures do not conform in all respects to the requirements of generally accepted accounting principles applicable to annual consolidated financial statements. These interim financial statements should be read in conjunction with the most recent annual consolidated financial statements for the year ended December 30, 2007.

The interim financial statements and the notes thereto have not been reviewed by the Company's external auditors pursuant to a review engagement applying review standards set out in the CICA handbook.

Note 2. Changes in accounting policies

Effective December 31, 2007, the Company adopted the following Canadian Institute of Chartered Accountants (CICA) Handbook Sections:

Section 3862, Financial Instruments - Disclosures and Section 3863, Financial Instruments - Presentation, which modify the disclosure and presentation requirements for CICA Handbook Section 3861. The CICA Handbook Section 3862 requires disclosure that enables a user of the financial statements to evaluate the significance of the Company's financial instruments and the nature and extent of risks arising from those financial instruments. The CICA Handbook Section 3863 carries forward the presentation requirements of CICA Handbook Section 3861. The new disclosures are included in Note 9.

Section 1535, Capital Disclosures requires the Company to make new disclosures to enable users of the financial statements to evaluate the Company's objectives, policies and procedures for managing capital. These new disclosures are shown in Note 11.

Section 3031, Inventories, replaces the previous inventories Section 3030. The new section provides more guidance on the measurement and disclosure requirements for inventories. For example, it requires that fixed and variable production overheads be systematically allocated to the carrying amount of inventory. These new disclosures are shown in Note 3. Upon adoption of the section the Company increased its opening inventory by $808, increased its future tax liabilities by $128 and increased its opening retained earnings by $680 (prior periods were not restated). The opening inventory amount was increased to include an allocation of depreciation expense to finished goods and work in process inventory.



Note 3. Inventories

Inventories are comprised of the
following:

March 30, 2008 December 30, 2007
--------------------------------

Finished goods $6,942 $5,537
Work-in-process 6,799 4,845
Tooling 3,114 1,994
Raw materials and supplies 23,730 20,752
--------------------------------
$40,585 $33,128
--------------------------------
--------------------------------


Raw materials and supplies are valued at the lower of cost or replacement cost. Tooling and finished goods are valued at the lower of cost or net realizable value. Net realizable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Cost includes material, labour and fixed and variable manufacturing overhead. Cost is determined on a first-in, first-out basis.

The cost of inventories recognized as an expense during the period was $77,186 and $90,584 for the three months ended March 30, 2008 and April 1, 2007, respectively.

During the period the Company did not have any inventory write-downs or reversals of previously written-down amounts.



Note 4. Capital stock

Authorized:
Unlimited Preference shares, no par value
Unlimited Class A subordinate, voting shares, no par value
("Class A shares")
9,000,000 Class B common shares, no par value ("Class B shares")


March 30, December 30,
2008 2007
-------------------------
Issued and outstanding:
5,763,072 Class A shares (2007 - 5,760,661) $98,528 $98,510
7,376,607 Class B shares (2007 - 7,376,607) 12,427 12,427
-------------------------
$110,955 $110,937
-------------------------
-------------------------


Note 5. Accumulated other comprehensive income (loss)


Three months ended March 30, 2008
---------------------------------
Unrealized gains
(losses) on
translating
financial
Unrealized gains on statements of
derivative instruments self-sustaining
designated as cash flow foreign
hedges operations Total
-----------------------------------------------------
Balance, as at
December 31, 2007 $509 ($6,976) ($6,467)
Aggregate
adjustments during
the period (387) 10,466 10,079
-----------------------------------------------------
Balance, as at
March 30, 2008 $122 $3,490 $3,612
-----------------------------------------------------
-----------------------------------------------------


Note 6. Earnings per share

Basic earnings (loss) per share from continuing operations and basic net earnings (loss) per share for the three months ended March 30, 2008 and April 1, 2007 are based on the weighted average common shares outstanding (2008 - 13,124,803 shares; 2007 - 13,115,618 shares). Diluted earnings (loss) per share from continuing operations and diluted net earnings (loss) per share for the three months ended March 30, 2008 and April 1, 2007 are based on the diluted weighted average common shares outstanding (2008 - 13,124,803 shares; 2007 - 13,130,494 shares). Certain shares were excluded from the diluted weighted average common shares outstanding as their effect was anti-dilutive (2008 - 15,515 shares).



Note 7. Consolidated statements of cash flows

The following is additional information to the statements of cash flows.

Change in non-cash operating working
capital: Three months ended
-------------------------------
March 30, 2008 April 1, 2007
-------------------------------
Accounts receivable $5,624 ($19,403)
Inventories (5,331) 1,209
Prepaid expenses (654) (520)
Accounts payable and accrued liabilities (5,797) 4,226
Restructuring charge - (19)
Income taxes payable (6,628) 787
-------------------------------
($12,786) ($13,720)
-------------------------------



Note 8. Employee benefits

The Company's net benefit plan expense, which is recorded in cost of sales
and selling, general and administration expenses, is as follows:


Three months ended
------------------------------
March 30, 2008 April 1, 2007
------------------------------

Pension benefit plans $662 $654
Other benefit plans 337 333
------------------------------
$999 $987
------------------------------
------------------------------



Note 9. Financial instruments

Financial instruments - carrying values and fair values

March 30, 2008 December 30, 2007
Carrying value Fair value Carrying value Fair value
---------------------------------------------------
Financial assets
Held for trading:
Cash $5,375 $5,375 $16,386 $16,386
Forward foreign
exchange contracts 211 211 509 509

Loans and receivables:
Accounts receivable 59,861 59,861 62,363 62,363

Financial liabilities
Held for trading:
Forward foreign
exchange contracts - - 426 426

Other liabilities:
Accounts payable and
accrued liabilities 40,150 40,150 43,894 43,894
Long-term debt $6,333 $6,333 $5,770 $5,770


The Company has determined that the fair value of its short-term financial assets and liabilities approximates their respective carrying values as at the balance sheet dates due to the short-term maturity of those instruments. The fair value of the long-term debt also approximates the carrying value as interest on most of this debt is charged at variable rates. The fair value of forward foreign exchange contracts was determined using quoted market values.

Foreign exchange contracts

The Company uses foreign currency forward contracts to manage well defined foreign exchange risks. In particular, the Company uses foreign exchange forward contracts to hedge certain future committed U.S. dollar and euro outflows and inflows. These forward contracts are not eligible for hedge accounting and consequently, are recognized on the balance sheet at their fair value, with changes in fair value recognized in earnings. A decision support system is employed and hedges are put in place when technical signals indicate it is appropriate to do so. As such, there may be times when the Company has left a foreign currency exposure unhedged. At March 30, 2008 and December 30, 2007 no hedges for committed U.S. dollar and euro outflows and inflows were in place.

In addition, the Company uses forward contracts to manage foreign exchange risk arising from the translation of foreign currency denominated monetary assets. As at March 30, 2008, the Company has committed to sell a total of US$44,900 (December 30, 2007 - $48,200) at an average exchange rate of 1.0208, with maturity dates in the second quarter of 2008. These contracts are not eligible for hedge accounting and, consequently, are recognized on the balance sheet at their fair value, with changes in fair value recognized in earnings. At March 30, 2008 the marked-to-market gain on these outstanding forward contracts totalled $45 (December 30, 2007 - loss of $106), which has been recorded in earnings.

The Company's subsidiary in Hungary, Wescast Hungary Zrt., entered into a series of foreign exchange forward contracts to sell euros in exchange for Hungarian forints. Wescast Hungary Zrt. expects a net long euro position in 2008 due to the excess of sales denominated in euros less expenses denominated in euros. At March 30, 2008 there were outstanding forward contracts to sell 13.6 million euros (December 30, 2007 - 18.1 million euros), with maturity dates from April 10, 2008 through December 10, 2008 at an average exchange rate to the Hungarian forint of 262.50. These forward contracts are designated and documented as cash flow hedges and are eligible for hedge accounting treatment. As such, the effective portion of gains and losses on these forward contracts will be recognized in earnings in the same period as, and as part of, the hedged transaction while the ineffective portion will be recorded in earnings immediately. At March 30, 2008 and December 30, 2007 there was no ineffectiveness related to these forward contracts recorded in earnings. The amount recorded in other comprehensive income related to these forward contracts that is expected to be reclassified to earnings in 2008 is a gain of $122 (December 30, 2007 - $509).

The Company does not purchase or hold derivative financial instruments for speculative purposes. The fair value of the foreign exchange contracts are based on market information from major financial institutions.

Other derivative instruments

To manage the electricity cost volatility that may arise, the Company enters into fixed-price forward contracts to purchase electricity. Due to various changes to Ontario government policy in the deregulated electricity market, the Company estimates that approximately 70% of the Ontario plants' electricity requirements will be purchased at prices mandated by the government. The Company continues to actively manage its remaining electricity cost volatility through the use of fixed-price forward contracts during the peak summer months. At March 30, 2008 and December 30, 2007 there were no outstanding fixed-price forward contracts to purchase electricity.

To manage natural gas cost volatility, the Company enters into fixed-price forward contracts to purchase natural gas. The current contracts expire August 31, 2008 and October 31, 2008. The estimated fair market value of these contracts as at March 30, 2008 was a gain of $205 (December 30, 2007 - loss of $103). The Company has documented these contracts as normal purchase contracts in order to qualify for the expected usage exemption. As such, these contracts have been accounted for as executory contracts; any gain or loss resulting from the contracts will be recognized in the statements of earnings upon contract settlement.

The Company does not enter into electricity or natural gas contracts for speculative purposes. The Company estimates fair market value based on available indicative pricing.

Financial risk management

The Company's activities expose it to a variety of financial risks ; market risk (including foreign exchange and interest rate), credit risk and liquidity risk. The Company's primary financial risk management objective is to ensure that the financial performance of the Company is not subject to the material negative impact of unmanaged risk.

Foreign exchange risk

The Company operates primarily in Canada, the United States, Hungary and China. The functional and reporting currency of the parent company is Canadian dollars. Foreign exchange risk arises because the amount of the local currency receivable or payable for transactions denominated in foreign currencies may vary due to changes in exchange rates ("transaction exposures") and because the non-Canadian dollar denominated financial statements of the Company may vary on revaluation into the Canadian dollar reporting currency ("translation exposures").

The Company's North American operations are exposed to exchange rate changes in the U.S. dollar to the Canadian dollar. The Company believes it is naturally hedged in North America to a large degree since the majority of North American sales are denominated in Canadian dollars and most of the North American manufacturing inputs are denominated in Canadian dollars. The Company's primary exposure in North America relates to the revaluation into Canadian dollars of its U.S. dollar denominated future tax asset. As of March 30, 2008, fluctuations of +/-5% would, everything else being equal, have an effect on loss from continuing operations before income taxes for the quarter ended March 30, 2008 of approximately +/-$1,700, prior to hedging activities.

In the Company's Hungarian operations, approximately 80% of revenues and approximately 50% of operating expenses are transacted in euros. As a result, the Company may experience transaction exposures because of the volatility in the exchange rate between the euro and the Hungarian forint. Based on the Company's estimated euro denominated net inflows, as of March 30, 2008, fluctuations of +/-5% would, everything else being equal, have an effect on loss from continuing operations before income taxes for the quarter ended March 30, 2008 of approximately +/-$300, prior to hedging activities.

The Company's operation in China is classified as an integrated foreign operation. As such, exchange gains and losses arising from the translation of the local currency financial statements into the Canadian dollar reporting currency of the parent are recorded in earnings. The operation in China is in the early stages of its development and the Company is currently assessing the impact that foreign exchange transaction exposures may have on the Company.

The objective of the Company's foreign exchange risk management activities is to minimize transaction exposures and the resulting volatility of the Company's earnings. The Company manages this risk by entering into foreign exchange forward contracts. As at March 30, 2008, the Company has hedged 100% of the estimated after-tax foreign exchange exposure related to the revaluation of its U.S. denominated future income tax asset and approximately 80% of its estimated net euro long position against the Hungarian forint.

The Company does not currently hedge the translation exposure of its self-sustaining foreign operations, which consists primarily of Wescast Hungary Zrt. Based on the Company's net Hungarian forint asset value at March 30, 2008, fluctuations in the exchange rate between the Canadian dollar and the Hungarian forint of +/-5% would, everything else being equal, have an effect on other comprehensive income of approximately +/-$5,900.

Interest rate risk

The Company's exposure to interest rate risk relates to its variable rate financing. At March 30, 2008 the increase or decrease in annual interest costs on the variable rate financing amounts to $100 for each 1% absolute change in interest rates.

Credit risk

The Company's financial assets that are exposed to credit risk consist primarily of cash, accounts receivable, director and employee share purchase plan loans and foreign exchange forward, electricity and natural gas contracts. The carrying value of financial assets, as disclosed in the table above, represents the Company's maximum credit exposure.

The Company's credit risk for trade receivables is concentrated, as the majority of its sales are to a relatively small group of Original Equipment Manufacturers ("OEM's") in the automotive industry. As at March 30, 2008 the Company's five largest trade debtors accounted for 57% of trade accounts receivable. The Company's management monitors the financial health of its large OEM customers and provides recommendations to the Board of Directors on a case-by-case basis in order to manage this credit risk, including the use of credit insurance or credit derivatives on selected accounts. As at March 30, 2008 the Company had accounts receivable put options covering $7,800 of the Company's OEM credit exposure.

In order to mitigate the risk associated with the Company's non-OEM credit exposure, the Company utilizes credit assessments, credit limits and accounts receivable insurance. New non-OEM customers are subject to an initial credit assessment and a credit limit is assigned in an amount equivalent to the accounts receivable insurance coverage. Credit limits are reviewed on a regular basis and credit assessments are updated at least annually. The Company has also established procedures to suspend the release of goods when customers have fully-utilized approved credit limits. From time to time, the Company will temporarily transact with customers on a prepayment basis where circumstances warrant. As at March 30, 2008 the Company had accounts receivable insurance covering $8,200 of the Company's non-OEM credit exposure.

The Company adjusts trade accounts receivable balances, through a provision for doubtful accounts, to expected realizable value as soon as the account is determined not to be fully collectable, with such adjustments charged to earnings. When a receivable balance is considered uncollectable, it is written off against the allowance for doubtful accounts. The Company updates its estimate of the allowance for doubtful accounts, based on a customer-by-customer evaluation of the collectability of trade receivable balances, taking into account amounts which are past due, the customer's payment history, and any available information indicating that a customer could be experiencing liquidity problems.



The aging of accounts receivable balances as of March 30, 2008 was as
follows:

----------------
March 30, 2008
----------------

Not past due $53,617
Past due 0-30 days 2,325
Past due 31-60 days 1,978
Over 61 days past due 5,447
Less allowance for doubtful accounts (3,065)
----------------
Total accounts receivable, net $60,302
----------------


The director and employee share purchase plan loans are secured by the underlying shares.

The Company is also exposed to credit risk from the potential default by any of its counterparties on its foreign exchange forward contracts and electricity and natural gas contracts. The Company mitigates this credit risk by dealing with counterparties who are major financial institutions and/or are included on an authorized list of counterparties maintained by the Company.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities, and maintaining credit facilities to ensure it has sufficient available funds to meet current and foreseeable financial requirements.



The following are the undiscounted contractual maturities of financial
liabilities as at March 30, 2008:


Carrying Less than 1 1 to 2 After 2
Amount year years years
----------------------------------------

Accounts payable and accrued
liabilities $40,516 $40,516 $- $-
Long-term debt 6,333 3,613 1,396 1,324

----------------------------------------
Total $46,849 $44,129 $1,396 $1,324
----------------------------------------


Management believes that future cash flows from operations and availability under existing banking arrangements will be adequate to support these financial liabilities. During the quarter, the Company negotiated an extension of its credit facility to provide a maximum of $30,000 in revolving advances. The facility expires on March 30, 2009. As at March 30, 2008 the Company had undrawn and available credit of $20,900 under the facility.

Note 10. Segment information

The Company operates in the automotive industry in three geographic segments, North America, Europe and Asia. The Company's manufacturing facilities, where appropriate, are geographically situated to align with the physical location of its customer base. The Company evaluates segment performance based on earnings or loss before income taxes.

The Company accounts for inter-segment sales at current market prices. All Corporate costs not directly allocated to the European or Asian operations have been allocated to the North American segment.



Three months ended March 30, 2008
---------------------------------

North Asia and Inter-segment
America Europe Other Eliminations Total
-----------------------------------------------------

Sales to external
customers $57,890 $ 24,310 $376 ($628) $ 81,948

Earnings (loss)
from continuing
operations 41 (926) (1,654) 17 (2,522)

Investment income 87 - - - 87

Interest expense 131 - 11 - 142

Depreciation and
amortization 5,325 2,521 415 - 8,261

Income taxes (63) 16 10 - (37)

Purchase of
property, plant and
equipment and other
assets $1,352 $535 $1,481 $- $3,368



Three months ended April 1, 2007
--------------------------------

North Asia and Inter-segment
America Europe Other Eliminations Total
----------------------------------------------------

Sales to external
customers $76,016 $ 30,168 $17 ($2,153) $ 104,048

Earnings (loss) from
continuing operations 2,412 1,204 (551) 32 3,097

Investment income 108 - - - 108

Interest expense 200 - - - 200

Depreciation and
amortization 6,483 2,535 31 - 9,049

Income taxes 1,713 17 - - 1,730

Purchase of property,
plant and equipment
and other assets $1,242 $1,999 $6,043 $- $9,284



March 30, 2008
--------------

North America Europe Asia and Other Total
------------- ------ -------------- -----
Total Assets $259,948 $131,530 $52,465 $443,943

Property, plant and
equipment $161,415 $92,962 $43,017 $297,394
---------------------------------------------------------------------------

December 30, 2007
-----------------

North America Europe Asia and Other Total
Total Assets $274,723 $123,517 $46,127 $444,367
Property, plant and
equipment $165,361 $86,017 $41,809 $293,187

---------------------------------------------------------------------------


Note 11. Capital Management

The Company's objectives in managing capital are to ensure sufficient liquidity to protect the Company's long-term viability as a going concern and to reduce the cost of capital through the conservative use of leverage.

The Company's total capital is defined as total debt plus shareholders' equity. Shareholders' equity is as presented on the balance sheet and total debt is defined as the sum of short-term and long-term interest-bearing debt. The Company uses the percentage of total debt to total capital to monitor the capitalization of the Company. One of the Company's financial objectives is to maintain a percentage of total debt to total capital of less than 30%. As at March 30, 2008 and December 30, 2007, the percentage of total debt to total capital was as follows:



March 30, 2008 December 30, 2007
---------------------------------

Total debt $6,333 $5,770
Shareholders' equity 355,987 347,706
---------------------------------
Total capital $362,320 $353,476
---------------------------------
---------------------------------

Percentage of total debt to total capital 1.7% 1.6%


In order to maintain or alter the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, sell assets to reduce debt, or draw on the credit facility. During the first quarter, the Company's Board of Directors decided to suspend the payment of dividends. The Board of Directors will review the Company's dividend policy on a periodic basis.

The Company is not subject to any capital requirements imposed by a regulator, however the Company must adhere to certain financial covenants related to capital management pursuant to the terms of its bank credit facility. Specifically, the Company must maintain a minimum tangible net worth and is subject to a maximum funded debt to EBITDA ratio, each as defined in the credit agreement. As at March 30, 2008 the Company was in compliance with these covenants.

Note 12. Comparative figures

Certain of the comparative figures have been reclassified to conform with the presentation adopted at March 30, 2008. Specifically, an unrealized exchange loss on future income tax assets was reclassified from the change in non-cash operating working capital to a separate line item included in the operating section of the consolidated statements of cash flows. Also, the effect of exchange rate changes on cash was reclassified from the change in non-cash operating working capital to a separate line item in the consolidated statements of cash flows.

Management's Discussion and Analysis Of Results of Operations and Financial Position For the Three Months Ended March 30, 2008

All amounts in this Management's Discussion and Analysis of Results of Operations and Financial Position ("MD&A") are in Canadian dollars unless otherwise noted. This MD&A should be read in conjunction with: the interim consolidated financial statements and notes thereto for the three-month period ended March 30, 2008; the "Management's Discussion and Analysis" included in the Annual Report of Wescast for the year ended December 30, 2007; and with the consolidated financial statements and notes thereto for the year ended December 30, 2007. The accompanying interim consolidated financial statements and the notes thereto have not been reviewed by the Company's external auditors pursuant to a review engagement applying review standards set out in the CICA Handbook.

This MD&A is current to May 5, 2008. Additional information relating to the Company is available online at SEDAR, www.sedar.com.

Overview

Wescast Industries Inc. ("Wescast" or the "Company") designs, casts, machines and assembles iron exhaust system components for automotive original equipment manufacturers ("OEMs") and Tier 1 customers for the car and light truck markets in North America, Europe and Asia. The Company employs approximately 1,900 people in 7 production facilities and 5 sales and design centres in Canada, Hungary, the United States, Germany, Japan and China. The Company also has sales and technical design representation in the United Kingdom and France.

The Company's resources are strategically located by geographic business units in North America, Europe and Asia. The Company believes that the combination of its design capability and high-quality manufacturing creates unique value for the customers in the markets that it serves. The Company believes this is the reason that it is the world's leading supplier of exhaust manifolds for passenger cars and light truck applications.

The Company's powertrain operations in North America are well established and consist of 5 production facilities. The European powertrain operations are conducted from a production facility in Hungary, through our subsidiary Wescast Hungary Zrt. The Company officially opened its integrated foundry and machining facility in China on April 8. The Company is currently manufacturing a small volume of production parts for customers in Asia and is ramping up several new global programs.

Current Market Conditions

North American light vehicle production volumes for the quarter totalled approximately 3.5 million units, an 8.3% decrease from the 3.8 million units produced during the same period in 2007. The Company's primary North American customer base, the Detroit 3 automakers, experienced a more significant production decline of 13.4% over the same period in 2007.

Results from Operations

Consolidated Sales

Consolidated sales for the quarter were $81.9 million, a 21.2% decrease compared to the previous year's level of $104.0 million. The consolidated sales are net of inter-segment sales of $0.6 million between the Company's North American, European and Asian business units. The sales analysis presented for the North American and European business units is based on gross sales.

Consolidated prototype and tooling sales in the first quarter were $1.6 million, down from the $4.9 million recorded in the first quarter of 2007, reflecting a decline in the number and timing of new customer programs.

North American Sales

North American sales, excluding prototype and tooling sales, declined by 23.0% to $56.8 million compared to $73.8 million reported in the same quarter last year. The Company experienced a quarter-over-quarter decline of 19.6% in unit casting sales volume in North America. Machining volumes were down 18.1% compared to the first quarter of 2007.

The unit volume and sales decline resulted from:

- Lower sales with General Motors due to a reduction in their manifold requirements as a result of the strike at auto parts supplier American Axle;

- A reduction in light truck volume requirements of the Detroit 3 automakers, due in part to high fuel prices; and

- The impact of sales price reductions, changes in product mix and foreign exchange, as the Canadian dollar was significantly stronger against the US dollar compared to the same quarter last year.

European Sales

Sales generated by the Company's operation in Europe, excluding prototype and tooling sales, were $23.8 million for the quarter compared to $27.5 million during the same quarter last year. The operation experienced a quarter-over-quarter decline in casting unit sales volume of 4.1% . Total units machined were 5.0% lower than the first quarter of 2007. The decline in unit volume and sales was attributable to lower requirements from Ford due to a temporary shutdown at one of their plants during the quarter; and the delayed implementation of a particular high-volume part that has been re-designed but not yet approved at another customer. Changes in product mix and sales price reductions had a negative impact on the level of sales compared to the first quarter of 2007. Also, poor operating performance due to equipment downtime had a negative impact on the level of shipments.

Gross Profit

Consolidated gross profit for the quarter was $4.8 million, down significantly from the $13.5 million reported in the first quarter of 2007.

The Company's North American operations generated gross profit of $7.0 million for the quarter, compared to $12.5 million generated in the same quarter last year.

- The North American operations generated lower gross profit due to the effects of:

-- Lower casting and machining volumes and changes in product mix;

-- Sales price reductions and foreign exchange; and

-- Higher raw material prices compared with 2007.

These factors were partially offset by the positive benefits of the following:

-- Improved operating performance of the manufacturing facilities as a result of better equipment uptime and more effective labour utilization; and

-- Lower depreciation expense, specifically of the machining operations.

The Company's European operations reported negative gross profit of $0.6 million in the first quarter of 2008, compared with gross profit of $1.3 million generated in 2007.

- The main factors for the significant decline were:

-- Lower casting and machining volumes compared to the first quarter of 2007;

-- Sales price reductions and changes in product mix;

-- Lower prototype casting margins;

-- Higher raw material and electricity pricing and increased labour costs; and

-- Increased maintenance costs required due to equipment downtime experienced during the quarter.

The negative impact from the above factors was partially offset by lower external consulting costs compared to the first quarter of 2007.

Pre-launch expenditures of the Company's developing Asian business unit had a negative impact on gross profit of $1.6 million in the first quarter.

Selling, General and Administration

The Company's selling, general and administration expenses for the quarter were $5.1 million, compared to $7.6 million incurred in the same period in 2007. Included in this amount was depreciation expense of $0.6 million for the quarter which was consistent with the amount reported in 2007. The majority of the decline in selling, general and administration expenses was due to lower payroll costs, lower external consulting fees and lower credit insurance costs compared to the first quarter of 2007. In addition, expenses related to the establishment of the operation in China, and classified as selling, general and administration, were lower during the quarter compared to 2007.

Research, Development and Design

The Company's research, development and design expenses for the quarter were $2.4 million, up $0.8 million from the $1.6 million reported in the first quarter of 2007. The increase was attributable to higher costs associated with developing and validating the Company's manufacturing capability for stainless steel exhaust manifolds and turbine housings.

Income Taxes

The effective income tax recovery rate on the loss from continuing operations for the quarter was 1.4% compared to an effective income tax expense rate of 35.8% in the first quarter of 2007. The main factor contributing to the change in the effective tax rate was that no tax benefit was recognized on the $3.2 million of losses generated by the operations in China and Hungary as these operations are subject to tax holidays. Partially offsetting this impact was a non-taxable foreign exchange gain of $1.3 million on the translation of foreign denominated future income tax assets of a foreign subsidiary for which no tax impact was recorded.



Quarterly Results

The table below sets forth selected financial information of the Company
for the eight most recent quarters.

------------------------------------------------------------------------
(unaudited; in thousands of Canadian dollars,
except per share amounts)

First Quarter Fourth Quarter
2008 2007 2007 2006

Sales $ 81,948 $ 104,048 $ 90,914 $ 84,686

Earnings (loss) from
continuing operations ($2,522) $3,097 ($13,466) ($3,055)

Net earnings (loss) ($2,522) $3,055 ($13,466) ($3,563)

Earnings (loss) from
continuing operations
per share
Basic and diluted ($0.19) $0.24 ($1.03) ($0.23)

Net earnings (loss)
per share
Basic and diluted ($0.19) $0.23 ($1.03) ($0.27)

------------------------------------------------------------------------


------------------------------------------------------------------------
(unaudited; in thousands of Canadian dollars,
except per share amounts)

Third Quarter Second Quarter
2007 2006 2007 2006

Sales $ 90,345 $ 84,825 $ 101,266 $ 102,613

Earnings (loss) from
continuing operations ($2,411) ($1,378) $1,176 $5,562

Net earnings (loss) ($2,381) ($1,399) $1,244 $5,276

Earnings (loss) from
continuing operations
per share
Basic and diluted ($0.18) ($0.11) $0.09 $0.42

Net earnings (loss)
per share
Basic and diluted ($0.18) ($0.11) $0.09 $0.40

------------------------------------------------------------------------


Notes:

1. The Company's sales and production volumes are generally lower in the third quarter, in comparison to the other quarters, as North American vehicle production is lowest during the third quarter due to model changeovers by the Detroit 3 automakers. Also, the Company's facilities traditionally shut down for a period during the third quarter to allow for summer vacations.

2. The Company recorded a one-time contingent loss of $9.8 million in the fourth quarter of 2007 related to potential income taxes and interest that may be owed for the taxation years 2002 through 2006 as a result of Canadian federal and provincial income tax reassessments received.

3. Severance costs of $1.5 million related to structural changes to better align the capacity of the North American operations with customer volume requirements were recorded in the fourth quarter of 2006.

Financial Condition, Liquidity and Financial Resources

At March 30, 2008, the Company had cash balances of $5.4 million and total debt of $6.3 million compared with cash balances of $16.4 million and total debt of $5.8 million at the end of 2007.

Operating Activities

The Company used $6.8 million of cash in operating activities during the first quarter compared to $0.2 million of cash generated in the same quarter last year. The level of cash used compared to 2007 was due primarily to lower earnings reported. Overall, cash used by changes in working capital was comparable to the first quarter of 2007. The level of inventory increased compared to December 30, 2007 due to a build of inventory in North America as fewer units were shipped compared to produced as a result of the American Axle strike. Our Asian business unit increased raw material inventory to prepare for the production of sample parts for various programs to be launched. Also, the adoption of a new accounting standard, as explained below, resulted in an increase to inventory at December 30, 2007.

Investing Activities

Capital expenditures for the first quarter were $3.4 million, compared to $9.3 million for the same quarter last year. Expenditures related to the establishment of the China facility totalled $1.5 million for the quarter compared to $6.0 million incurred during the first quarter of 2007.

Financing Activities

During the quarter, the Company paid credit facility fees of $0.5 million related to the extension of its credit facility. There were no dividends paid during the quarter as the Company's Board of Directors decided to suspend the payment of dividends as of February 26, 2008. The Board of Directors will review the Company's dividend policy on a periodic basis. Dividends paid during the first quarter of 2007 were $0.8 million ($0.06 per common share).

Financing Resources

The Company is well positioned to fund strategic initiatives with cash generated from operations and the utilization of available credit, if required.

During the first quarter of 2008, the Company negotiated an extension of its credit facility to provide a maximum of $30.0 million in revolving advances. The facility expires on March 30, 2009 and features a springing security clause, which requires the Company to provide security to the lender if certain financial ratios are not maintained. The springing security clause would consist of a security interest in all of the personal property of the Company and certain material subsidiaries. At March 30, 2008, the springing security clause was not triggered based on the Company's financial ratios. Also, the Company had only bank account overdrafts and outstanding letters of credit as drawings under the facility. Based on the current drawings under the facility and certain financial covenants that the Company must satisfy, approximately $20.9 million of unused credit was available to the Company at March 30, 2008.

Shareholders' Equity

Shareholders' equity at the end of the quarter was $356.0 million, an increase of $8.3 million from the $347.7 million at December 30, 2007. The adoption of a new inventory accounting standard resulted in an increase to opening retained earnings of $0.7 million. The net loss generated during the first quarter decreased shareholders' equity by $2.5 million. Accumulated other comprehensive income increased by $10.1 million during the first quarter. The significant change during the quarter resulted from exchange fluctuations associated with the Company's investment in Hungary due to the weakening of the Canadian dollar against the Hungarian forint.

Changes in Accounting Policies

Effective December 31, 2007, the Company adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3862, Financial Instruments -- Disclosures; Section 3863, Financial Instruments -- Presentation; Section 1535, Capital Disclosures; and Section 3031, Inventories. The adoption of the new financial instruments and capital standards resulted in additional note disclosure requirements. The new inventory standard provides more guidance on the measurement and disclosure requirements for inventories. For a description of the principal changes due to the adoption of the accounting standards, see Note 2 to the unaudited consolidated financial statements for the quarter ended March 30, 2008.

Internal Control Over Financial Reporting

There have been no changes in the Company's internal controls over financial reporting during the three-month period ended March 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Company's internal controls over financial reporting.

Outstanding Share Data

As at May 5, 2008, the Company had 5,763,773 Class A Subordinate Voting Shares and 7,376,607 Class B Common Shares outstanding. The Company also had outstanding stock options to acquire 526,956 Class A Subordinate Voting Shares.

Risks and Uncertainties

The Company is subject to a number of risks and uncertainties that could affect our future results and financial condition. For a discussion of these risks and uncertainties, please see the Management's Discussion and Analysis included in our 2007 Annual Report.

Outlook

Current industry estimates project 2008 North American light vehicle production of 14.5 million vehicles, down 3.6% from the 15.0 million vehicles produced in 2007. The Company's production volumes in North America in 2008 will not reach the levels achieved in 2007, as a result of lower production levels projected for its primary customer base. The Company expects that its production volumes in Europe in 2008 will be higher than in 2007. The Company's Asian business unit will be in ramp-up mode during 2008 with a focused effort to grow our developing market position in the Asian marketplace.

The Company has experienced significant downward price pressure from its customer base for some time. This pressure has intensified in recent years as some of these customers react to negative changes in their profitability and market share losses. This pressure has resulted in an increased frequency on the part of the domestic automakers to subject their supply requirements to ongoing market testing in relation to pricing; historically this form of price-driven market testing was done prior to a program entering production or following a major re-design. To date, the Company has had success in retaining major programs, or substantial portions of major programs, that have been subjected to these market tests. Through this process the Company has seen price reduction targets established by customers that exceed historic levels. The price targets reflect the impact on market pricing of new global price benchmarks being established by competitors located in low-cost countries.

The Company's results are sensitive to raw material prices for scrap steel and moly, the pricing of which is heavily impacted by global demand. The Company expects its average scrap steel and moly prices for 2008 to be higher than the averages experienced in 2007.

The Company's strategic direction is the pursuit of a global powertrain strategy capable of generating attractive growth and strong financial return prospects for its stakeholders:

- The focus of the Company's North American business unit is on maintaining the dominant market position it currently holds within its segment of the powertrain marketplace. To do so, the Company must continue to strive to be globally cost competitive in order to respond to the significant pressure on pricing being exerted by its customer base. To meet this challenge, the Company will continue to pursue aggressive year-over-year cost reduction targets in these operations. To achieve these targets, the Company will continue to promote a culture of continuous improvement and innovation by applying its HEART participative management process and utilize the Wescast Operating System to identify and implement "lean" initiatives.

- The Company will continue to focus on expanding its powertrain business through the expansion of its customer base and geographic coverage.

-- The Company's integrated foundry and machining facility in Wuhan, Hubei Province, China officially opened on April 8, 2008. The Company now has a global footprint of manufacturing, sales and engineering support in North America, Europe and Asia.

- The Company is committed to being able to offer its customers the highest quality, technologically advanced products at globally competitive prices. As a result, the Company will maintain its commitment to fund research and development activities so that it may respond with innovative product technology solutions provided through the use of innovative manufacturing techniques. These activities include:

-- The continued development and deployment of materials, such as stainless steel, that offer advantages such as the ability to withstand higher temperatures or provide other performance and cost advantages; and

-- Deploying solutions to customers that address their hot-end system requirements and to meet new, demanding emission regulations and requirements.

The Company believes that maintaining focus on these areas is the best means to ensure the long-term success of our business.

Forward-Looking Information

The contents of this MD&A contain statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking statements based on certain assumptions. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this MD&A are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements may include financial and other projections as well as statements regarding Wescast's future plans, objectives or performance for the current period and subsequent periods. The words "may", "would", "could", "will", "likely", "expect", "anticipate", "estimate", "intend", "plan", "forecast", "project" and "believe" or other similar words and phrases are intended to identify forward-looking statements. Persons reading this MD&A are cautioned that such statements are only predictions, and that Wescast's actual future results or performance may be materially different.

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties principally relate to the risks associated with the automotive industry and include, but are not limited to: our operating and/or financial performance, including the effect of new accounting standards on our reported financial results, fluctuations in interest rates, changes in consumer and business confidence levels, consumers' personal debt levels, vehicle prices, the extent and nature of purchasing or leasing incentive campaigns offered by automotive manufacturers, environmental emission regulations, fuel prices and availability, the continuation and extent of outsourcing by automotive manufacturers, changes in raw material and other input costs, our ability to continue to meet customer specifications relating to product performance, cost, quality, delivery and service, industry cyclicality or seasonality, trade and/or labour issues or disruptions, customer pricing pressures, pricing concessions and cost absorptions, actual levels of program production volumes by our customers compared to original expectations, including program cancellations or delays, price reduction pressures, dependence on certain engine programs and the market success and consumer acceptance of the vehicles into which such powertrain products are installed, our relationship with and dependence on certain customers, currency exposure, failures in implementing Wescast's strategy, technological developments by Wescast's competitors, government and regulatory policies and changes in the competitive environment in which Wescast operates.

Wescast does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this MD&A or to reflect the occurrence of unanticipated events, except as required by law.

Contact Information

  • Wescast Industries Inc.
    Mr. E. Kent Harris
    Chief Financial Officer
    (519) 750-0000