Van Nuys Firm Wins Contracts for Auto Wheels
As a center of automotive design, Southern California typically leaves the manufacturing of cars and auto parts to the nation’s heartland, yet a Van Nuys maker of aluminum wheels has won a series of contracts that analysts believe will give it more than 40% of the market over the next 18 months.
Superior Industries International Inc. said Tuesday it won contracts to provide aluminum wheels for the new Pontiac Aztek SUV, the 2001 Dodge Intrepid and a new Buick model from General Motors Corp. All told, the contracts represent $60 million of new business for Superior.
In late August, Superior won $28 million in new business from Toyota, including a contract to provide newly designed aluminum wheels for the 2002 Camry, one of the nation’s best-selling sedans.
The deals represent an important extension for Superior, which has been trying to gain footholds outside its traditional GM and Ford Motor Co. customer base, which account for 90% of its sales. That should drop to 75% over the next year or so, said Steven Borick, Superior’s executive vice president.
For the first six months of this year, Superior’s profit jumped 16.3% to a record $40.4 million, or $1.53 per share, contrasted with net income of $34.7 million, or $1.28 per share, for the first half of 1999. Revenue increased 13.5% to a record $331.2 million from $291.9 million for the year-ago period. At the end of last year, Superior had captured 32% of the cast aluminum wheel market in the United States, said Jon Rogers, an analyst with First Union Securities in New York. He said the new contracts will help give Superior 42% of the market by 2002. Rogers said it’s particularly important for Superior to win contracts for new vehicles and for high-volume autos.
“We think this is a solid company. They are growing market share significantly, they have strong net income and they have among the highest margins in the automotive industry,” Rogers said.
Superior is operating at about a 12.5% profit margin this year compared with the 5% to 8% that’s typical in the industry.
Superior’s shares fell 13 cents Tuesday to close at $30.06 on the New York Stock Exchange. Its stock has risen 12% this year but is off from a high of $34.38 reached April 11.
The company was hurt last month by the temporary shutdown of three Ford truck plants to help replace recalled Firestone tires faster. Stephen Girsky, an analyst with Morgan Stanley Dean Witter & Co., estimated the shutdown would shave about a penny to 66 cents per share from Superior’s third-quarter earnings.
Superior has about 1,000 employees at its factory and headquarters in Van Nuys and 6,000 internationally. Borick said it is adding and expanding factories and will be able to produce 18 million wheels annually by the end of next year.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Superior Gains
Superior Industries International stock (ticker: SUP) has gained 12% so far this year though it’s off its high of $34.38 in April.
*
Monthly closes and latest on the New York Stock Exchange
Tuesday: $30.06, down 13 cents
Source: Bloomberg News
