According to Automotive News, automotive parts supplier Linamar Corp. achieved double-digit growth in revenue and profit in the first quarter of this year, driven by a rebound in automotive parts sales from the previous year's downturn and recent acquisitions contributing to revenue.
In the last quarter, Linamar's overall revenue increased by 18.7% year-on-year, reaching CAD 2.72 billion (approximately USD 2 billion), marking a new high. Revenue from the mobility sector amounted to USD 1.4 billion, higher than last year's USD 1.3 billion, while revenue from industrial operations rose from USD 428 million to USD 533 million. The company's operating profit in the first quarter increased by 38.7% to USD 196.8 million, or USD 2.12 per share.
Linda Hasenfratz, CEO and Chair of Linamar, stated that the company expects strong growth in 2024, and the first-quarter performance is a good start. Hasenfratz told analysts on a conference call, "We are indeed seeing a strong recovery in the mobility sector, both compared to the same period last year and the previous quarter."
However, Hasenfratz also cautioned that recent delays by automakers in electric vehicle projects would affect some of Linamar's midterm plans, including the construction of an integrated die casting plant in Welland, Canada.
Hasenfratz stated that the mobility sector continues to "rebound" from last year's lows and is "returning" to normal profit levels. But she added that the twists and turns in electrification processes would bring some unpredictability to suppliers. "The adoption of any technology is never a straight line; there will always be ups and downs, just like the current electric vehicle market."
Hasenfratz pointed out that Linamar's flexibility in product portfolio and manufacturing capabilities helps the company cope with the "volatile" production environment. However, due to automakers delaying or reducing output for some electric vehicle projects, the company is still affected.
Linamar's plan to open an integrated die casting factory in Welland in early 2025 is one example. The company announced in May 2023 its plan to establish a new high-pressure die casting factory in Welland, Ontario. At that time, the company stated it was the first supplier in North America to invest in manufacturing technology for large aluminum structural components and had secured a significant order. Hasenfratz did not disclose specific timelines or customer names but told analysts that the company now "expects delays in the aforementioned factory construction plan."
In April this year, Ford Motor Co. of Canada announced a delay in producing a three-row all-electric crossover model in Oakville, Ontario, from the originally planned early 2025 to 2027.
Meanwhile, Linamar is still in talks with a range of potential customers interested in integrated die casting. Mark Stoddart, the company's Chief Technology Officer, told analysts that automakers initially were skeptical about how the technology would integrate into their products but are now changing their attitudes. "They are beginning to realize the benefits and see what their competitors are doing."
Hasenfratz stated that to address delays in factory projects, the company is looking for other automotive manufacturing projects that can "utilize (integrated die casting) equipment." They are also "very cautious" in electric vehicle project contracts to ensure that Linamar and its customers "share the risk."
