Supplier Drew Industries Inc. posted lower sales and profits for its second quarter, ended June 30, due to continued weakness in its core recreational vehicle and manufactured housing markets.
The White Plains, N.Y.-based company, parent to Lippert Components Inc. and Kinro Inc., also pointed to the rising raw materials costs that arose in the second quarter and will further impact third-quarter performance.
“We continue to face highly volatile raw material costs, particularly steel and aluminum,” said Fred Zinn, Drew’s president. “While the impact of these higher costs began in the second quarter, the cost of raw materials flowing through our cost-of-sales in the third quarter will be significantly higher than the second quarter.”
Net income in the quarter was $9.2 million, down 27% compared to earnings of $12.6 million in the year-ago period while sales fell 18% to $151 million from $184 million. Drew attributed its lower revenue primarily to the “declines in industrywide production of both RVs and manufactured homes.”
For the six months, net income declined 17% to $18.3 million from $22.2 million a year ago and sales dropped 13% to $310 million from $357 million.
Drew said its RV segment represented 74% of both consolidated revenue and total segment operating profit in the quarter. The unit reported sales of $111 million, a decrease of 17% from $134 million the year prior.
“With the continuing economic downturn affecting consumer discretionary purchases, we expect that the soft conditions in the RV market will not improve in the coming months,” said Drew CEO Leigh Abrams.
Despite adverse conditions, Drew said that through acquisitions, new product introductions and its position as “an increasingly important supplier to leading RV manufacturers” the company increased its product content for travel trailers and fifth-wheel to $1,725 per unit in the last year.
On July 1, Lippert completed the acquisition of Seating Technology, with sales of $40 million in 2007, and recently purchased a patent for RV stabilizers for $3 million. Drew said that both acquisitions would further expand the company’s product offerings to customers.
“Though we face challenging times resulting from economic and industry conditions, Drew continues to be well-positioned for the eventual economic recovery, particularly because of our increasing market share within our core markets and because of our strong balance sheet,” said Abrams.