TORONTO (Reuters) - Canadian auto parts supplier Martinrea International reported record fourth-quarter earnings on Thursday that were in line with analyst expectations and announced “significant” new contracts dominated by demand for lightweight structures.
The Vaughan, Ontario-based company posted fourth-quarter sales of C$926.15 million ($703.23 million), ahead of the C$889.1 million consensus estimate and up 5.4 percent over last year, despite flat auto production in its key markets and challenges posed by trade and tariff issues.
Martinrea, which produces aluminum and metal parts alongside fluid management systems, said that in recent months it has won new business worth C$230 million in annualized sales at peak volumes.
That includes C$190 million in lightweight structures, for Fiat Chrysler, BMW and Toyota, starting in 2021 and 2022. There is another C$40 million in propulsion systems, including fluid management and engine products, for Volvo, Ford, Geely, Scania and JLR, starting mainly in 2020.
“Our lightweighting solutions in particular are attracting great interest,” Chief Executive Pat D’Eramo said in a statement. “2018 was our best year ever for winning new product mandates, with approximately C$800 million in new organic business announcements in the past 12 months.”
Chairman Rob Wildeboer said the company expects adjusted operating income margins above 8 percent in 2019 and above 9 percent in 2020, when revenue is seen exceeding C$4 billion.
“The impact of the steel and aluminum tariffs placed by the U.S. and Canada is not helpful to the industry but we believe the tariffs will be removed sometime this year,” Wildeboer said.
A new United States-Mexico-Canada Agreement (USMCA) was signed on Nov. 30, but must be approved by the U.S. Congress and Canadian and Mexican legislators before becoming law.
In the quarter ended Dec. 31, Martinrea reported adjusted net income of C$43.8 million, or 51 Canadian cents a share, compared with C$43.1 million, or 50 Canadian cents a share, in the same period last year. Net income rose nearly 17 percent to C$37.8 million.
Reporting by Susan Taylor, Editing by Rosalba O'Brien