MRO Magazine

Linamar helped by ventilator contracts as automobile sales plummeted

August 10, 2020 | By Anita Balakrishnan

GUELPH – Linamar Corp. executives said this week that making ventilators for COVID-19 relief is one of many ways the manufacturing company powered through plummeting auto sales.

The company based in Guelph, Ont., saw its latest quarterly sales slashed by more than half amid the COVID-19 pandemic. But Linamar, which focuses on manufacturing transportation parts and machinery, has also taken on five contracts to produce fully assembled ventilators.

“We are often questioned on how we will handle a changing landscape,” said chief executive Linda Hasenfratz. “We see technology change as only one thing – opportunity, and we will continue to chase those opportunities.”

Sales for the three months ended June 30 totalled $923.6 million – down from roughly $2.09 billion in the same period the previous year.


Hasenfratz estimated that COVID-19 was the single biggest impact, leaving a $1.13 billion dent in sales. Auto sales were down 63.5 per cent in North America and 59.7 per cent in Europe, Hasenfratz estimated.

Second-quarter sales in its industrial segment fell 56.7 per cent and in its transportation segment 55.3 per cent, partly due to adverse conditions associated with the pandemic.

Its industrial business includes agricultural harvesting machines. Hasenfratz cited a tough harvest last year, tariffs, and political backlash that is “hurting” North American farmers, particularly soybean and canola farmers and Canadian farmers.

Overall, the manufacturer said it recorded a net loss of $37.9 million or 58 cents per diluted share, compared with a net profit of $150.2 million or $2.28 per share in the same quarter of 2019.

Despite the slide, Hasenfratz estimated that the second quarter is the trough or low point for the pandemic, but said that even in the case of a second shutdown, the company forecasts being profitable.

“There is still a lot of uncertainty out there and now is not the time to become complacent,” she said.

Hasenfratz said the company had cut capital spending by 18 per cent, and had scraped out about $30 million in annualized savings.

Linamar said its normalized net loss totalled $22 million or 34 cents per share for the quarter, down from a net profit of $158.3 million or $2.40 a share.

Analysts expected a net loss of $72.45 million or $1.34 per share, and a normalized net loss of $23 million or 80 cents per share, according to financial markets data firm Refinitiv.

In addition to trimming travel expenses and taking advantage of government relief, Hasenfratz said the company was able to save on costs like uniform cleaning and trash collection when fewer employees were present at workplaces.

Although the workforce has seen “sporadic cases” of COVID-19 popping up, more than 90 per cent of employees are back to full-time work and the company has contained and stopped any transmission onsite, she said.

“We have had no serious outbreaks in any of our plants,” she said. Chief operating officer Jim Jarrell added that while there will be more COVID cases that pop up among car manufacturers and suppliers, there is a “commitment to keep going.”

“We’ve got to be doing both things: Keep people safe and keep livelihoods going,” said Jarrell.

Going forward, Hasenfratz predicted a boost from electric vehicles, noting that fully electric vehicles are set to surpass hybrids for the first time.

“Electrified vehicles continue to present a great opportunity for us,” she said.


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