Buhler Industries turns a profit despite historically high steel prices

Winnipeg Free Press
Fri Jul 22 2005
By Martin Cash

BUHLER Industries continues to make headway in an industry whose profit margins have been hit hard by historically high steel prices.

The Winnipeg-based farm implement manufacturer reported revenue of $58.3 million for the quarter ending June 30, 2005, an increase of 0.9 per cent from the same quarter in 2004. Net profit was down by 38.8 per cent to $2.67 million, however last year's quarterly profit of $4.36 million included a one-time gain of $1.6 million from the sale of capital assets.

"This is exactly what we expected," said Craig Engel, Buhler's president and chief operating officer. "Manufacturing operations have shown continued slow and steady improvement. Our plan is to in increase gross margin slowly and surely and that's what's happening."

Engel said that four quarters ago, when steel prices were going up and Buhler had not yet raised the prices on some of its lines, its gross margins were 14 per cent. He said the goal was to increase margins to 18 per cent in 2005 up to 20 per cent in 2006.

"We are slightly ahead of schedule in that regard," Engel said. "Steel prices are still high and it will be a while before they are back to their historic averages."

The company posted earnings per share for the quarter of 11 cents compared to 17 cents for the same quarter last year.

But Avi Dalfen, an analyst at First Associates Investments Inc. in Toronto, said by taking out the one-time gain last year of $1.6 million it makes last year's earnings more like 14 cents.

"We are revising our forecasts right now," Dalfen said. "There are not many surprises here."

A company statement indicated that revenue expectations for the next five quarters are expected to match the previous year's totals and the company is expected to improve its profit margins.