Company News

CORRECTED-UPDATE 1-Canada's Linamar profit beats on cost cuts as COVID-19 hurts demand

(Corrects to say ‘above’ and not ‘below’ analysts’ estimates in paragraph 8)

May 13 (Reuters) - Linamar Corp on Wednesday beat first-quarter profit estimates as the Canadian auto parts maker cut capital asset expenditures and improved liquidity as demand declined amid the COVID-19 pandemic.

Auto part makers are grappling with tepid demand, as lockdowns and government restrictions have forced automakers to halt production.

The company said it cut capital asset expenditures by 25% to C$90.7 million ($64.34 million) in the first quarter and was conserving cash by implementing cost reductions, workforce adjustments and payment controls.

As of March 31, Linamar’s liquidity, measured as cash and cash equivalents and available credit improved to C$1.2 billion.

However, sales in the company’s industrial unit fell 35.7% to C$299 million in the first quarter, while transportation sales dropped 17.1%.

The company’s net earnings fell to C$78.5 million, or C$1.20 per share, in the first quarter ended March 31, from C$132.3 million, or C$2 per share, a year earlier.

Sales fell 21.5% to C$1.55 billion.

Excluding items, the company earned C$1.04 per share, above the analysts’ average estimates of 99 Canadian cents. ($1 = 1.4098 Canadian dollars) (Reporting by Sanjana Shivdas in Bengaluru; Editing by Shailesh Kuber)