Production ending on the Chrysler 200 and startup costs for a new facility in Leon, Mexico helped drive both profits and revenue down during the second quarter for Glendale-based Strattec Security Corp.
The vehicle lock and part maker reported net income of $398,000 for the quarter, down 88 percent from the same time last year. Earnings dropped from 95 to 11 cents per diluted share and revenue was down 3.5 percent to $98.9 million.
“After winning record amounts of new business last fiscal year, we are faced with additional costs in executing new programs which have a negative impact now, but should create positive results when those programs go into production,” said Frank Krejci, Strattec president and chief executive officer. “We are also actively adding new capital equipment, building a new facility in Leon, Mexico, plus investing in people and manufacturing processes to improve quality which will benefit us in the future.”
The company saw a nearly 30 percent drop in sales to Fiat Chrysler during the quarter, a change that was attributed to lower vehicle production and content on certain components. The declines were driven by the December 2016 discontinuation of the Chrysler 200 and lower volumes on the Pacifica minivan.
Sales to General Motors were up with higher vehicle production volumes while Ford, Hyundai and Kia were all flat. Tier 1 and Commercial and other OEM customer categories were both higher during the quarter, primarily on sales of latches, fobs and driver controls.
Strattec also reported $8.9 million used for additions to property, plant and equipment during the quarter. Krejci said earlier this month he believes there will be plenty of business to support the new Mexico facility, even as companies like Ford announce plans to bring production to the United States.
