Falling sales of SUVs hit autoparts maker Tomkins
Friday 01 August 2008
Profits at the engineering group Tomkins plunged 80 per cent in the first half of the year, smashed by the $175m (£ 88.4m) writedown it made at its Canadian car parts business following falling sales of SUVs.
The UK group posted only a slight decline in sales, but pre-tax profits plummeted to just $61.6m for the first six months of this year, from $293.6m in the corresponding period of last year. Its forecast for the second half of the year only served to heap more misery on investors.
David Newlands, Tomkins chairman, said the group "continued to face challenging macroeconomic conditions in the first half of 2008". He added that its automotive original equipment and residential housing operations "have weakened further since our last update". Profits were hit by what the group called a "non-cash impairment" of $175.1m, primarily in relation to the value of its Ontario-based Stackpole business, which is fully exposed to the weakening automotive markets in the US.
The surprise announcement of this charge was brought on by North Americans turning against that bugbear of the environmentalists – the sports utility vehicles, or SUVs – and light trucks.
"Production volumes of light trucks and SUVs have fallen faster than we budgeted for," the chief executive Jim Nichol said, adding that production was at its lowest level since the 1980s.
Tomkins bought Stackpole, which makes car parts for customers such as General Motors and Ford, for $331m in 2003.
The group added that its building products division had also suffered in the wake of the credit crunch.
It expects market conditions to continue to be "challenging" for a number of its businesses, including for building products and Gates Powertrain, the residential business of its Air Systems Components division.
The group added that while the industrial and automotive markets in Europe were relatively strong in the first half, they are expected to soften in the second.
The company will also be battered by the rising cost of energy and raw material, especially steel and oil-related materials, and admitted it would be forced to put up its prices as a result.
"We expect the second half headwind from raw materials to be higher than the first, though low-cost country sourcing, material substitution and price increases will mitigate much of the impact," it said.
- 1 Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
- 2 Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
- 3 The Simpsons death: Creator Al Jean would 'kill himself' before character like Homer or Lisa
- 4 British man raped while urinating in bushes at Oktoberfest beer festival in Germany
- 5 A teacher speaks out: 'I'm effectively being forced out of a career that I wanted to love'
Five-year-old Iris Grace is raising awareness of autism through her extraordinary paintings
Car tax disc changes: Two days to go - and they affect you much more than just not displaying a piece of paper
Isis an hour away from Baghdad - with no sign of Iraq army being able to make a successful counter-attack
British man raped while urinating in bushes at Oktoberfest beer festival in Germany
George Clooney and Amal Alamuddin wedding: The famous congratulate actor and human rights lawyer after Venice nuptials
Isis, we are told, is a 'clear and dangerous threat to our way of life'. I’m sorry, but I just don’t buy it
Exclusive: 'Putin's Russia has been my biggest regret,' says Nato's outgoing Secretary General
'Women, walk wherever you want' posters taken down in Stamford Hill following 'unacceptable' signs separating men and women
There’s no excuse for Dave Lee Travis’s behaviour, but we need to keep a sense of proportion
Mark Reckless becomes second Tory MP to defect to Ukip in a month
Should gay sex be illegal? 16% of Britons think so
- < Previous
- Next >
iJobs Money & Business
NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...
£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...
Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...
£300 - £330 per day: Ashdown Group: SQL Developer (Stored Procedures) Watford...