Swedlow Profits Drop, New-Product Costs Cited
Although sales of its aircraft plastics products have been on the rise, Swedlow Inc. of Garden Grove reported that fourth-quarter and full-year profits dropped because of the start-up costs of a new product.
For the full year, profits of $1.4 million were down 26% from $1.9 million, while revenues of $54.7 million increased 18% from $46.3 million.
For the quarter ended March 30, profits were $455,000, down 11% from $514,000. Quarterly sales were $15.2 million, a 19% increase from $12.8 million.
David A. Swedlow, chairman and chief executive, said the company’s increased sales were the result of new military orders for its aircraft windshields, canopies and windows. However, he said profits were eroded by the costs of starting production of some of the products.
The company said its business backlog, primarily composed of orders from the military, stood at $52.8 million at year’s end, 20% above the $44 million at the end of the 1985 fiscal year.
In an unrelated matter, the company said the U.S. Court of Appeals in Washington heard arguments last week on litigation sparked by the proposed acquisition of Swedlow by PPG Industries Inc. for about $42 million.
The PPG acquisition bid has been opposed by the Federal Trade Commission on the grounds that it would substantially reduce competition in the aircraft window manufacturing industry. PPG, a major glass maker, now holds about 45% of the worldwide aircraft window market. With the acquisition of Swedlow, the company’s market share would increase to about 75%.
In February, a federal court judge ruled that PPG could purchase Swedlow stock but had to operate the company as a separate entity from PPG. The FTC is appealing that decision. Swedlow officials said Tuesday they could not estimate when the appeals court would make a ruling on the matter.