Strattec profits fall due to business challenges and investments
Cost pressures from automakers and higher expenses linked to new products and a new factory reduced Strattec Security Corp. net income in the quarter that ended Oct. 2, the company announced in a press release.
Profit in the fiscal first quarter fell to US$ 1.5 million, or 42 cents per share, from US$ 3.3 million, or 90 cents, in the same period last year.
Wisconsin-based Strattec makes automotive locks, keys, latches, door handles, steering column and instrument panel ignition lock housings, as well as power sliding side door and gate systems. The company owns three production plants in Ciudad Juarez. A new facility is on schedule to start operations by mid-2017 in Guanajuato.
The company reported higher sales of US$ 100.2 million, a 3.9% jump from US$ 96.5 million last year. Higher sales to General Motors Co. and Ford Motor Co. as well as Hyundai and Kia were offset somewhat by a drop in sales to Fiat Chrysler, the company’s largest customer.
“The results of this last quarter have been impacted by both a combination of business challenges and investments in the future,” said Frank Krejci, president and chief executive of Strattec, in the statement. “We are focused on finding ways to reduce costs, improve quality of our products and capture efficiencies to offset price reductions to customers.”
The company had higher spending on product development linked to new business awards as well as construction of its new plant.