Linamar forms new structures group after improved Q2 earnings
Note: All figures in this story are in Canadian dollars unless otherwise indicated.
Linamar Corp. posted record revenue and improved earnings in the second quarter of 2023, as its industrial unit showed continued strength and automotive parts sales stayed on the rebound from their pandemic-era lows.
The Guelph, Ont.-based supplier said sales totaled C$2.55 billion ($1.9 billion USD) in the quarter, up from $1.98 billion in the same period a year earlier.
Linamar CEO Linda Hasenfratz said company margins continue to “trend upwards” from their low point in late 2021 when vehicle production slowed to a crawl amid the global microchip shortage.
“This quarter has been another example of Linamar’s diversification strategy again paying dividends in driving consistent, sustainable earnings growth,” she said on a Wednesday conference call with investors and analysts.
Linamar’s mobility segment had sales of $1.77 billion in the second quarter, up 20 percent from the same period of 2022. Its industrial segment recorded even stronger growth, posting revenue of $777.3 million, up 54 per cent from the comparable quarter last year.
Going forward, the company said it expects to maintain double-digit sales growth across both its mobility and industrial units in the back half of 2023. It also forecasts another year of double-digit growth in 2024.
Parts for battery-electric and hybrid vehicles will be a large part of this expansion.
The emerging segment is “dramatically shifting the landscape” of the company’s mobility business, Hasenfratz said. Electrified or propulsion-agnostic components make up about one-third of Linamar’s mobility sales today. That figure is expected to rise to 56 percent by 2027, internal estimates show.
To build focus in the area, the company also announced the formation of a new corporate unit. The Linamar Structures Group will encompass several newly acquired battery enclosure plants in Europe and the U.S., its Mills River castings plant in North Carolina and a new giga castings plant under construction in Welland, Ont.
Hasenfratz said the new global group, which has bookings of about $1 billion today, will “play a pivotal role” in Linamar’s automotive business as the industry shifts to EVs.
The company is also keeping the door open to acquisitions, Hasenfratz added.
“Our strong balance sheet and liquidity means we have the ability to continue to pursue acquisition opportunities as they arise.”
Linamar ranks No. 59 on the Automotive News list of the top 100 global suppliers with worldwide sales to automakers of $4.3 billion USD in 2022.
