Linamar Industrial Segment Reports More than 60 Percent Decrease in Sales

Guelph, Ontario-based Linamar, Skyjack’s parent company, announced second quarter results for 2009. Sales for the second quarter of 2009 were $378 million, down $247.4 million from $625.4 million for the second quarter of 2008. Industrial segment sales decreased 64.4 percent or $97 million for the quarter from $150.7 million in the second quarter of 2008 to $53.7 million in the second quarter of 2009. The sales for the second quarter of 2009 differed from the corresponding period in 2008 due to significant global volume reductions as a result of uncertainty in the market and restricted customer credit availability on a global basis.

The company’s operating loss for the second quarter of 2009 was $9.8 million after adjusting for unusual items in the quarter. This compares to $52.3 million adjusted operating earnings for the second quarter of 2008, a decrease of $62.1 million. The decrease was driven by under absorption of fixed costs due to the significant volume reductions in global markets in both segments; and the capital asset impairments related to the bankruptcy filings of General Motors and Chrysler in the Powertrain/Drivelines segment.

The adjusted operating losses for the Industrial segment were $9.2 million in second quarter of 2009, a decrease of $23.4 million or 164.5 percent over the first quarter of 2008. Taking into account the unusual items of the second quarters of each year, adjusted net loss for the second quarter of 2009 was $10.1 million ($0.16 net loss per share) versus a profit of $32 million ($0.48 net earnings per share) in the second quarter of 2008.

The company generated $88.4 million in operational cash flow, $61.7 million of which was from reductions in working capital. On June 30, 2009, the amount available under the company’s syndicated revolving credit facility was $201.5 million, down $48.1 million from March 31, 2009. On April 16, 2009, the company withdrew $100 million CAD from the syndicated revolving credit facility which were held in short-term investments until June 5, 2009, at which time, the company used these funds to repay the

“Despite the toll that excessive production shutdowns took on our sales and earnings this quarter, we are very pleased by the excellent level of cash generated, indicative of our ability to aggressively reallocate capital from existing lines to new programs and continue to grow despite low cash investment,” said Linamar CEO Linda Hasenfratz. “We also had a fantastic quarter in terms of new business both takeover and longer term, lining us up for continued growth in the coming months and year.”