The second-quarter results include an after-tax gain of $1.5 million on the disposition of excess real estate and other assets in Canada, and after-tax costs of $1 million resulting from the debt amendments entered into in the second quarter of 2001, Allied said.
Despite the poor economic climate, Hugh E. Sawyer, Allied’s president & CEO, believes a turnaround is closer than expected.
“Our second quarter results were impacted by reduced production, but we are beginning to see preliminary evidence of recovery at our largest clients,” Sawyer said. “New vehicle sales remain at healthy levels, inventories have returned to normal levels, and manufacturing plant downtime has been sharply reduced.”
Revenues for the six-month period ended June 30 were $468.4 million versus $578.8 million for the same six-month period of 2000. The company experienced a net loss of $24.6 million in the first six months of 2001, compared to net income of $5.9 million for the same period of 2000. The results include an after-tax charge of $3.2 million for severance and work force reduction expenses recorded during the first quarter of 2001.
The decline in revenues and earnings during the second quarter is primarily the result of lower vehicle delivery volumes due to reduced new vehicle production by the Big Three automakers, General Motors, Ford and DaimlerChrysler, said Allied.
The Big Three – all major customers of Allied Automotive Group – began reducing new vehicle production in the fourth quarter of 2000, and continued the reduction through the second quarter of 2001, in order to reduce excess new vehicle inventory. Inventories at the end of June 2001 are lower than prior year levels – 56 days at June 30, 2001 versus 61 days at June 30, 2000.