NORTHVILLE, MI — Hayes Lemmerz International reported that its sales for the fiscal year ending on January 31 rose 9.1 percent to $2.24 billion, compared with $2.06 billion a year earlier, due primarily to strong demand overseas and favorable currency exchange rates. Earnings from operations for the fiscal year were $21.7 million, excluding fresh start accounting adjustments and reorganization items, down from $43.9 million a year earlier.
“Higher iron and steel prices reduced earnings by $18 million for the year and customer production volumes in North America were lower, as well. Given the impact of raw material costs, together with overall difficult industry conditions, I am extremely pleased with the progress we made on the operational initiatives to lower costs and position Hayes Lemmerz for growth and improved earnings in 2005 and beyond,” said Curtis Clawson, president, CEO and chairman of the board.
“During 2004, we continued our expansions in Thailand, the Czech Republic, Mexico, Turkey and Brazil, closed our Howell, Mich., aluminum wheel facility, and announced the potential divestiture of our Commercial Highway Hub and Drum business. In March 2005, we announced the closure of our La Mirada, Calif., aluminum wheel facility, Clawson continued. “Our dependence on the North American automotive market continues to decrease, with more than 50 percent of our sales now being generated outside of North America. We have product content on all of the top ten selling platforms in Europe and on seven of the top ten selling platforms in North America. In addition, we have made great strides in diversifying our customer portfolio by decreasing sales to the Big 3 from 54 percent in fiscal 2001 to 44 percent in fiscal 2004.”
The company’s cash flows from operations increased to $164.6 million in fiscal 2004, from $115 million in fiscal 2003. Capital expenditures in fiscal 2004 were $158.7 million, compared with $133 million in fiscal 2003. The increased capital expenditures enabled us to continue our low cost country expansion strategy, meet demand for new vehicle platforms and support maintenance and cost reduction programs. Capital expenditures are expected to be approximately $145 million in fiscal 2005.
The company said it remains comfortable with its current earnings guidance and outlook for 2005 and expects total revenue to be approximately $2.3 billion to $2.4 billion and Adjusted EBITDA to be approximately $220 million to $235 million, while free cash flow is expected to be slightly negative.
Clawson also noted that for 2005, the company has negotiated significant steel cost recoveries from customers, and will continue to pass through aluminum price fluctuations to customers.
“As the only truly global aluminum and steel wheel manufacturer, we have expanded our production capacity in low cost countries. This strategy paid off in 2004. Higher volumes in international markets boosted sales $154 million, more than offsetting the $65 million reduction in OEM production requirements in North America,” Clawson said.
For the fiscal year ending January 31, Hayes Lemmerz had a net loss of $62.3 million, compared with a year-earlier profit of $996.5 million. The company noted however, results are not comparable because the company emerged from Chapter 11 reorganization in 2003, resulting in significant accounting items that do not reflect ongoing business results.
To learn more about Hayes Lemmerz, visit: www.hayes-lemmerz.com.
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