TORONTO 鈥� Executives at Martinrea International Inc. told analysts that they were optimistic on the company鈥檚 prospects for electric vehicles, even as a shortage of microchips has become a burden on the auto industry.聽
The comments came as Martinrea capped a difficult year in which it faced automotive plant closures with its net profit falling 12 per cent to nearly $45 million in the final quarter of 2020.
Martinrea executives said there have been 鈥渉iccups鈥� around semiconductors amid a worldwide shortage, and that it鈥檚 likely to be 鈥渂umpy鈥� going forward. General Motors said this week than an Ontario plant would have more downtime through at least mid-April. GM is one of several automakers to idle plants this spring amid the chip shortage.
Martinrea executives said that there is sometimes only a week鈥檚 notice of whether chip shipments will come to the automakers, and that the whole industry had 鈥渦nderestimated鈥� the issue.
鈥淲e are seeing tremendous fluctuations in releases from many customers,鈥� said chief executive Pat D'Eramo.
鈥淭his is a combination of the chip shortages, and harsh winter weather in the southwest U.S., all causing significant downtime to our customers 鈥� due to the lack of natural gas caused by the winter weather in Texas. The weather and natural gas problems have subsided, but the chip shortage will persist.鈥澛�
The company has also been making big bets on graphene through investments in a company called NanoXplore, but has faced challenges around other commodities like aluminum. Executives said it has also been a struggle to get staff to plants abroad amid travel restrictions.
The auto parts manufacturer says it earned 56 cents per diluted share in the fourth quarter, down from 63 cents per share or $51.2 million a year earlier.
The adjusted profit surged 30.7 per cent to $44.2 million or 55 cents per share, up from $33.8 million or 42 cents per share in the fourth quarter of 2019.
Revenues for the three months ended Dec. 31 increased 16.7 per cent to $1.07 billion from $917.6 million in the prior year.
Martinrea was expected to report an adjusted profit of 52 cents per share on $1 billion of revenues, according to financial markets data firm Refinitiv.
For the full-year, it lost $27.3 million or 34 cents per share, compared with a profit of $181.2 million or $2.19 per diluted share in 2019.
Adjusted profits dropped to $46.9 million or 58 cents per share, down from $187.7 million or $2.27 per share a year earlier.
Revenues decreased 12.6 per cent to $3.37 billion, from $3.86 billion in 2019.
Despite the setbacks, the company touted several new contracts during the quarter, including one with Tesla. The company said that of the $115 million in total new business in the quarter, $45 million was for pure electric vehicle platforms.聽
While many of Martinrea鈥檚 products are 鈥渁gnostic鈥� to the type of power, executives said the company has plans to transition from internal combustion products like fuel lines and tanks into electric vehicle products like battery housing.
When asked about new electric vehicle programs being launched by automakers like Ford in Ontario, D'Eramo said Martinrea is in a good position to win additional work.
鈥淲e have capacity here," said D'Eramo. "We are serving those plants now.鈥澛�
This report by The Canadian Press was first published March 4, 2021.
Companies in this story: (TSX:MRE)
Anita Balakrishnan, The Canadian Press
