From aftermarketNews Staff & Wire Reports
ZEELAND, Mich. — Gentex Corp. has revised its prior estimate for top line growth for the third quarter ended Sept. 30.
In the company’s second quarter news release on July 22, the company had estimated that its top line growth for the third quarter of 2008 and balance of the year would be approximately 10 percent higher than the revenues reported for those same periods in 2007, based on the mid-July light vehicle production forecast of CSM Worldwide. At that time, the company’s Senior Vice President Enoch Jen stated that he felt that there was more downside than upside to that forecast in light of the significant uncertainties in the global automotive and overall economic environments.
Since that time, there have been numerous automotive announcements of light vehicle production cuts, extended automotive plant shutdowns, significant declines in vehicle sales in both the United States and Europe, and turmoil in the financial markets. Based on those items and poorer economic conditions, the company now believes that its revenues in the third quarter of 2008 will decline by approximately five percent compared with the same period last year. Primarily due to the lower sales level, the company will be unable to leverage its fixed manufacturing overhead costs, which will negatively impact the company’s gross margin. In addition, due to the significant downturn in the equities markets, the company now expects that the realized gains/losses on the sale of equity investments will be approximately $4 million lower than the second quarter of 2008.
"While we are not satisfied with the third quarter results, the reasons for the decline in top line growth are due to macroeconomic conditions that are well beyond our control," said Gentex Chairman of the Board and Chief Executive Officer Fred Bauer. "And, despite the gloom and doom in the economy and financial markets, by many other measures Gentex is doing well, as we remain very profitable, are financially sound and have a very strong balance sheet. We do not currently expect to change our dividend policy based on the existing tax treatment of cash dividends, and we currently expect to continue to execute the company’s share repurchase plan that has been in place since 2003."
Jen said that the company plans to provide updated guidance for the fourth quarter of 2008 when the company announces the actual third quarter of 2008 financial results on October 21.
"We believe that there is way too much uncertainty at this time to provide a meaningful forecast for the fourth quarter," said Jen. "Hopefully the automotive and financial markets will begin to settle down over the next few weeks, and we’ll have more reliable information to use as a basis for forecasting top line growth in the fourth quarter of 2008."
The company’s updated guidance for revenue growth in the third quarter of 2008 is based on CSM Worldwide’s mid September 2008 light vehicle production forecast. In that forecast, CSM predicted that light vehicle production units for the third quarter of 2008 would be 3 million for North America, 4.9 million for Europe and 3.5 million for Japan and Korea.
For more information about Gentex, go to: www.gentex.com.
