Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=210039
Story Retrieval Date: 3/11/2014 5:33:19 PM CST
Modine's international segments reported sales decreases in the second quarter.
Modine fails to rev things up at home and abroad
Summary: Modine Manufacturing Co. reported a second-quarter loss Tuesday. Executives blamed slowdowns in Europe and Asia coupled with restructuring charges for Modine’s disappointing showing.
Modine Manufacturing Co. reported a second-quarter loss Tuesday on lower revenues. Executives blamed slowdowns in Europe and Asia coupled with restructuring charges as the drivers of Modine’s disappointing showing.
The Racine, Wis.-based manufacturer of thermal technology lost $6.8 million, or 26 cents per diluted share, a swing from a profit of $12.2 million, or 3 cents per share, a year ago. That missed the 10-cent estimate of analysts surveyed by Bloomberg.
Revenue spiraled 14 percent lower to $339.9 million from $397.3 million in the same quarter last year.
Modine specializes in heating and cooling technologies. Their components are used in light- to heavy-duty vehicles, heating, ventilation and air-conditioning equipment, industrial equipment and refrigeration systems worldwide.
“Unfortunately, our markets have continued to soften,” said Modine CEO Thomas A. Burke.
Demand in markets such as North America, Europe, South America and Asia fell across the board. A manufacturing slowdown in Asia resulted in a 31 percent decrease in sales, which fell to $13.8 million from $20 million in the year-ago quarter.
Even so, Burke is determined to increase Modine’s share of the Asian market. “We are focused on winning the business and adjusting our cost structure for the region,” he said.
Further west, the ailing auto industry punctured Modine’s financial tires in Europe. The company was forced to close facilities and cut workers - a process that cost the company $18.1 million.
A strong dollar also affected the company’s business overseas.
Domestic competitors in Modine’s foreign markets are becoming more popular as a result of companies looking to cut costs – a trend that Modine wants to combat in the long run.
“Our teams still are focused on cost control,” said Lucareli. Modine began restructuring plans for Europe that will include selling assets, part of its cautious approach. The company also plans to shorten workweeks and eliminate temporary staff to control costs as volume declines from North America to Asia.
Executives also plan to shift growth strategies aimed at auto programs to heavy-duty programs for commercial vehicles, a segment of the business that continued to report steady growth.
In the first half, Modine reported a loss of $2.9 million, or 29 cents, a swing from a profit of $32.6 million, or 30 cents per share, in the same period last year. Revenue decreased 15 percent to $690.3 million from $815.2 million.
Modine shares were up 60 cents Tuesday to $7.46.