Superior Profits Fall Significantly - Analyst Blog


Superior Industries Inc. ( SUP ) saw a significant decline in profits to $2.7 million or 10 cents per share in the fourth quarter of 2012 from $12.0 million or 44 cents in the same quarter of 2011 (excluding income tax benefit of $28.2 million). Earnings per share were substantially lower than the Zacks Consensus Estimate of 26 cents.

Revenues in the quarter fell 3% to $210.0 million due to flat sales volume and a reduction in average selling price due to lower aluminum prices. Gross profit decreased to $12.8 million or 6% of sales, from $18.1 million, or 8% in the prior year quarter. The decrease was attributable to higher costs for maintenance and labor, partially offset by lower aluminum prices which are normally passed through customers.

Selling, general and administrative expenses in the quarter rose to $7.4 million or 4% of net sales, from $6.2 million, or 3% for the comparable period in 2011. The increase was attributable to a $1.5 million benefit in 2011 for reduction in the deferred compensation liability, partially offset by lower net cost in 2012.  

For full year 2012, Superior Industries reported a decline in profits to $30.9 million, or $1.13 per share from $67.2 million or $2.46 in 2011. The decline was largely attributable to a swing to income tax expense of $3.6 million in 2012 from a $25.2 million income tax benefit in 2011. Earnings per share were lower than Zacks Consensus Estimate of $1.28.

Revenues for the year declined marginally to $821.5 million from $822.2 million in 2011. The decline was mainly caused by a 7% rise in sales volume to12.5 million units that was more than offset by a reduction in average selling price, primarily due to a decline in aluminum prices.

Gross profit decreased to $60.6 million or 7% of net sales, from $67.1 million, or 8% in 2011.  The decline was caused by higher manufacturing costs, mainly labor and maintenance. The higher manufacturing costs resulted from higher sales volume, as well as equipment reliability and other challenges that reduced operating efficiencies, especially in the older U.S. facilities. The company continued to operate its facilities at high utilization rates throughout the year.

As of Dec 31, 2012, Superior Industries had a working capital of $338.3 million, including cash, cash equivalents and short-term investments of $207.3 million. This compared with a working capital of $335.7 million, including cash, cash equivalents and short-term investments of $192.9 million. The company has no bank or other interest bearing debt at the end of the year.

California-based Superior Industries is one of the world's largest designers and manufacturers of cast aluminum road wheels for the automotive industry. The company's aluminum road wheels are sold to OEMs such as Audi, BMW, Chrysler LLC, General Motors Co. ( GM ), Fiat, Ford Motor Co. ( F ), Jaguar, Land Rover, Mazda, Mercedes Benz, Mitsubishi, Nissan Motor Co., Skoda, Subaru, Suzuki and Toyota Motor Corp. ( TM ). It currently retains a Zacks Rank #4 (Sell).

FORD MOTOR CO (F): Free Stock Analysis Report

GENERAL MOTORS (GM): Free Stock Analysis Report

SUPERIOR INDS (SUP): Free Stock Analysis Report

TOYOTA MOTOR CP (TM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: F , GM , SUP , TM

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