VAN NUYS, Calif. – Superior Industries International has announced full year net income of $67.2 million for 2011, or $2.46 per diluted share, compared with net income of $51.6 million, or $1.93 per diluted share, in 2010.
Net sales for 2011 increased 14 percent to $822.2 million from $719.5 million in 2010, reflecting an increase in unit volume and the pass-through pricing of aluminum. Gross profit declined to $67.1 million, or 8 percent of sales, from $89.2 million, or 12 percent of sales, in 2010. Income from operations decreased to $39.8 million from $59.8 million a year ago, largely mirroring the gross profit decline.
The company said the decline in gross profit and margin percentage reflected the impact of a weaker product mix and manufacturing inefficiencies. Reflective of typical market lead-time, product mix changes largely are the result of highly competitive program bidding during 2009.
While continuing to run at full capacity, manufacturing inefficiencies translated into higher labor cost in order to meet customer requirements, the company said. Other costs also were higher, including repairs and maintenance, operating supplies and wheel development activities.
“Relatively healthy general market activity and vehicle production rates tend to mask the challenges posed by ongoing changes in our product mix,” said Steven Borick, chairman, CEO and president. “Our business today largely is the result of competitive activity that originated two and three years ago. While the non-metal pricing of our products trended down in 2011, manufacturing challenges increased, as design complexity and cosmetic standards for our products continue to rise.
“Very high capacity utilization tends to magnify the effect of operating inefficiencies caused by equipment breakdowns, lower productivity on the front end of product launches and other factors. These challenges were more prevalent in our U.S. plants. We continue to focus on improving factory operations, with actions ranging from continued addition of new management and organizational competencies, to higher investment in capital equipment.
“We believe we have great opportunities to improve our operating performance. Although tangible results of our efforts likely will not be visible in the shorter term, we are committed to implementing improvements that we are confident will contribute to the longer-term health of the business,” Borick added.
Net sales for the 2011 fourth quarter advanced 14 percent to $216.8 million from $191 million for the previous year, principally reflecting an 11 percent increase in units shipped and higher pass-through pricing of aluminum. Unit shipments of 3.2 million in the 2011 fourth quarter exceeded those in the comparable quarter last year by 305,000.
Gross profit for the 2011 fourth quarter declined to $18.1 million, or 8 percent of sales, from $29 million, or 15 percent of sales, for the fourth quarter of 2010. The decline in gross profit and margin percentage reflected, in part, the impact of a weaker product mix. Higher factory costs included direct labor, repairs and maintenance and operating supplies. Costs for wheel development activities also increased in 2011 when compared to the prior year. Manufacturing operations continued to operate at full capacity utilization.
