Tower International Inc. raised its full-year revenue outlook to $2.17 billion to reflect new business, favorable foreign exchange rate gains and higher steel prices.
The metal components and assemblies supplier said Tuesday that second-quarter net income rose 17 percent to $22.4 million.
Revenue advanced 13 percent to $556 million as the company benefited from outsourcing and an ongoing shift in production mix "from cars to trucks and SUVs," Tower CEO Jim Gouin said in a statement.
Two-thirds of the supplier's revenue is generated in North America, where the company is benefiting from steel resale programs, Gouin said Tuesday on a conference call with analysts.
"It's pure pass-through on that portion," Gouin said. "So they buy it, they sell it to us, we sell it back to them -- zero impact."
In Europe, which represents a third of the company's revenue, steel prices are negotiated annually with each automaker, Gouin said.
"The part that does impact us is when we talk about the ancillary steel pieces that we have to buy, so fasteners, nuts, bolts, rivets, weld wire ... and are we seeing pressure there because of the tariffs? And the answer to that question is yes," Gouin said.
The overall impact of steel pricing pressures on the company's annual profits is expected to be $3 million to $5 million, Gouin said, referring to headwinds and profitability.
Gouin said steel represents about 60 percent of the supplier's overall cost base.
"It's not a material issue for us ... and I don't want to have to offset any more costs than I already have to offset, so I'm not happy about it," Gouin said. "But from a materiality standpoint, not that big a deal for us."
The suburban Detroit supplier's second-quarter North American sales increased 16 percent to $382 million despite a 2 percent industry-wide decline in light-vehicle output, the company said. Second-quarter sales in Europe rose 8.5 percent to $174 million.
Adjusted earnings before interest, taxes, depreciation and amortization in the second quarter rose 10 percent to $58.2 million.