Acquisitions, cost cutting help boost Magellan
Tuesday, August 18, 1998
By ANDREW LUNDY
The Financial Post
Earnings at Magellan Aerospace Co. soared 234% in the second quarter and revenue almost doubled, owing to cost-cutting, industry-wide growth and recent acquisitions.
For the three months ended June 30, the Toronto-based aerospace firm reported net income of $7.1 million (12› a share), up from $2.1 million (5›) for the same period last year. Revenue was $100.7 million, up 96% from $51.4 million last year.
President and chief operating officer Richard Neill noted strong growth in the aerospace industry -- particularly increased outsourcing by aircraft manufacturers to parts companies like Magellan -- as a
major reason for the change.
For the six months ended June 30, net income was $13.2 million (23›) on revenue of $188 million, compared with $4.1 million (10›) on revenue of $99.9 million a year earlier.
In addition, cost-saving measures such as group purchasing, and the acquisition of Bristol Aerospace Ltd. last year and two parts manufacturers -- Chicopee Manufacturing Ltd. in Kitchener, Ont. and Ambel Precision Manufacturing Corp. in Bethel, Conn. -- this year, boosted the firm's numbers.
Greg McLeish, an analyst with Octagon Capital Canada, said the company's performance has met expectations, although one of its subsidiaries, Fleet Industries Ltd. in Fort Erie, Ont., is still
"disappointing."
Shares of Magellan (MAL/TSE) closed at $7.40 yesterday, up 45›.
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