Automodular reports Q2 profit, sales down from year ago
Announced Ford plans to stop outsourcing work to Automodular operation in Oakville, Ont.
AJAX, Ont.—Automodular Corp. reported a sharp drop in quarterly earnings as it said Ford Motor Co. has decided to stop outsourcing work to its operation in Oakville, Ont.
The company said Ford will take over the assembly work currently done by Automodular starting in the fourth quarter of 2014.
It said Ford called the decision a strategic one.
“While we are disappointed by Ford’s decision and recognize the impact that it will have on our many stakeholder groups, we also believe that our company has a strong management team focused on building value,” said Automodular.
The company said it is focused on continuing operations after the Ford contract ends, but noted that winding down the company is one option.
“Our goal is unchanged—we are looking to find opportunities to leverage our core skills for the betterment of the company and its shareholders by securing contracts organically or through acquisition,” Automodular said.
The company reported a second-quarter profit of $774,000 or four cents per share for the three months ended June 30 compared with a profit of $4.4-million or 22 cents per share a year ago.
Sales fell to $21.9-million, down from $29.7-million.
The quarter included a $4-million charge related to the $8-million estimated closure costs to shut down its Oakville, Ont., operation.
“We expect to record additional severance costs relating to the closure when we formalize our plans with respect to the affected salaried employees,” the company said.
“We also expect to record facility and other related closure costs at the time that they are incurred or at the time the facilities are closed, depending on their nature.”
With the Oakville plant, Automodular has two operating facilities and currently employs approximately 525 people.