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RV industry supplier Drew Industries Inc. today (Nov. 1) reported robust sales for the third quarter, buoyed by a strong performance in the RV sector, but lesser gains in net income because of rising materials costs.
Drew, parent of RV industry supplier firms Kinro, Lippert and Zieman, reported that net income did not grow as rapidly as net sales primarily because of continued increases in steel prices, which had not yet been fully passed on to its customers.
Net income for the nine months ended Sept. 30 reached $21.7 million, compared with $15.2 million last year. For the quarter, net income was up 14% to $7.5 million compared with the $6.6 million earned in 2003.
White Plains, N.Y.-based Drew posted a 55% increase in sales to $148.8 million compared to the $96.1 million earned in the previous year. Year-to-date sales were $398.5, compared to $266.3 million last year.
The cost of steel, which has doubled since last year, affected profits in Drew’s RV segment, which achieved a 62% increase in sales for the quarter, but only a 4% increase in operating profits.
“We are continuing our stringent control over operating costs while at the same time further developing our management team, systems, and research and development capabilities, all of which are essential to continue our growth,” said Leigh J. Abrams, Drew’s President and CEO. “Because of our efficiency efforts, we were able to achieve improved profits year over year despite our biggest cost – raw materials – increasing drastically. We will continue to remain diligent in managing operations to maximize profits.
“Long-term demographics for this industry remain strong. While the RV industry association is projecting an 8 percent decline in industry shipments in 2005, we remain confident in our ability to continue to outperform the industry and grow this business,” Abrams said. “We have also substantially increased our spending on research and development and quality control in order to improve production efficiencies and speed new product introductions. As a result, we will shortly bring to market several high-quality new products such as leveling devices, new axles and steps for RVs. Product innovation and market expansion have become the core drivers of growth at Drew, and we will continue to make them focal points in the quarters to come.”