Glendale-based Strattec Security Corp. reported a 6.5 percent increase in sales during its third quarter, but the costs of starting up new lines of business and a new plant in Mexico led to a decrease in profits.
The maker of car locks, keys and other parts saw sales to Fiat Chrysler Automobiles, General Motors and Ford Motor Co., increase, but net income during the quarter fell about 15 percent to just under $3 million. Earnings dropped from 95 to 80 cents per diluted share.
“Due to the added costs of launching significant amounts of new business and the production start-up expenses related to our new Leon, Mexico facility for painting and assembling door handles we continue to feel the negative impacts on our profitability. We believe these impacts will continue over the next two quarters before these efforts will positively contribute to our results,” said Frank Krejci, Strattec president and chief executive officer.
Revenue from Fiat Chrysler, Strattec’s largest customer was up 11.9 percent to $31.3 million with higher vehicle production volumes. Sales to GM were up 2.4 percent to $21.4 million with higher content sales on models the company provides components for. Sales to Ford were up 7.1 percent on higher vehicle production volumes.
Despite the increases, gross profit margin decreased from 16 percent to 13 percent. Strattec attributed the decline to expediting costs from new product launches and an unfavorable exchange rate affecting operations in Mexico.