Amcast Says Continuing Manufacturing Problems to Impact Fourth Quarter Earnings
26 August 1999
Amcast Says Continuing Manufacturing Problems to Impact Fourth Quarter Earnings
DAYTON, Ohio--Aug. 26, 1999--Amcast Industrial Corporation today announced that manufacturing problems surfacing in its third fiscal quarter will have a greater-than-anticipated performance impact on its fourth fiscal quarter ending August 31.The company expects final period earnings to be significantly below Wall Street's fourth quarter consensus earnings per share estimate of 50 cents, versus 10 cents in the comparable period a year ago. Management cited as causes the new aluminum product scale-up manufacturing process challenges for automotive suspension components, as well as skilled labor shortages for aluminum wheel production.
Amcast reported higher than expected costs and low-product yields at its two Indiana wheel plants and its Ohio suspension components plant during the third quarter. The new aluminum suspension components are for highly successful new car models, which have required extraordinary efforts and costs to ensure adequate customer supply in the fourth quarter. Despite actions taken to correct these problems during the fourth quarter, improvements have not been achieved at the rates anticipated, management said. Although management believes these manufacturing process problems to be temporary, as previously stated, the difficulty in arriving at solutions is compounded by high customer demand, new product launch and scale-up challenges, and high turnover of skilled manufacturing employees. For example, accelerated worker recruiting and training is expected to improve product quality and lessen scrap rates of aluminum wheel production, after skills are honed.
The company expects progress to be made, but some negative impact on the first quarter of fiscal 2000 results is anticipated. Fourth quarter and full fiscal year results will be reported in October.
Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy.
This release includes "forward-looking statements" which are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors include, among others: general economic conditions less favorable than expected, fluctuating demand in the automotive and housing industries, price pressures in the company's automotive and flow control businesses, effectiveness of production improvement plans, inherent uncertainties in connection with international operations and foreign currency fluctuations, and labor relations at the company and its customers.