Linamar to Buy Out Wescast in Joint Venture; Reports Fourth Quarter Loss of $1.3 Million

Wescast Industries Inc. plans to sell its 50 percent stake in its European joint venture with Linamar Corp. to Linamar, the auto-parts makers announced Wednesday. The two companies were still negotiating the sale of Weslin Industries Inc., and did not provide any financial details of the transaction. In a conference call to discuss quarterly results, Linamar chief executive Linda Hasenfratz did not expect Weslin -- a joint venture established in 1999 to manufacture iron automotive castings for the European market -- would become profitable soon.

From Canadian Press

TORONTO — Wescast Industries Inc. plans to sell its 50 percent stake in its European joint venture with Linamar Corp. to Linamar, the auto-parts makers announced Wednesday.

The two companies were still negotiating the sale of Weslin Industries Inc., and did not provide any financial details of the transaction. In a conference call to discuss quarterly results, Linamar chief executive Linda Hasenfratz did not expect Weslin — a joint venture established in 1999 to manufacture iron automotive castings for the European market — would become profitable soon.

She said that although losses at the European joint venture were reduced in the fourth quarter from the third quarter, they were “not at an acceptable level.”

“We expect to see continued improvement in Weslin results this year, but do not expect it to be profitable until late this year, or more likely early next year,” Hasenfratz said.

When Wescast reported in February a fourth-quarter loss of $8.3 million in February, the Brantford, Ont.-based company said it had been “significantly impacted by operating losses incurred at Weslin.”

Also Wednesday afternoon, Linamar reported it lost $1.3 million, or two cents per share, in the fourth quarter of its fiscal year, ended Dec. 31. That compared to earnings of $13.7 million, or 20 cents per share, in the year-earlier quarter.

Sales at Linamar, based in Guelph, Ont., grew by 18 percent to $408.5 million from $346.9 million.

However, during the quarter, Linamar recorded a one-time charge of $23.6 million to end its sales agent agreements. Linamar intends to use its own sales force from now on and said it expects to save money in the long run by doing so.

Also in the fourth quarter, European unit production was down by 7.5 percent, Linamar said.

For the full year, Linamar earned $40.5 million, or 56 cents per share, on sales of $1.53 billion. That compared to 2002 earnings of $57 million, or 80 cents per share, on sales of $1.36 billion.

Linamar makes components, modules and systems for the auto industry, as well as aerial lift platforms at its Skyjack Inc. division. The company employs more than 9,000 workers in Canada, the U.S., Mexico, Germany, Hungary and Japan.

Shares in Linamar, which announced its earnings after markets closed, ended the day down 12 cents at $12.89 on the Toronto stock market.

Shares in Wescast, which announced the sale of its interest in Weslin after the end of the trading day, closed up 50 cents at $37.

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