Wheel supplier Superior Industries International on Thursday reported a first-quarter net loss of $4 million.
That's compared with net income of $10 million during the same quarter in 2022. The loss was caused by industry production levels that are still below pre-pandemic levels, as well as struggling European aftermarkets, executives said during a call Thursday with analysts.
The company's revenue fell 4.8 percent to $381 million. With the cost of aluminum significantly lower than a year ago, value-added sales increased by 7 percent despite lower unit shipments and revenue, according to CFO Tim Trenary. Still, customers opted for more expensive, larger wheels and the company's content-per-wheel costs increased by 16 percent.
"We enjoyed considerable success in recovering cost inflation in 2022 and pivoted late last year to negotiating appropriate price increases to offset the cost of inflation, the cost of OEM production schedule volatility and lower fixed-cost absorption," Trenary said. "These negotiations are ongoing."
The company, based in suburban Detroit, has made a stuttering recovery over the last two years from a brutal first half of 2020, when losses totaled more than $200 million.
The company is not betting on full industry recovery to pre-COVID production levels, CEO Majdi Abulaban said. Superior has launched several initiatives to trim costs, including a $4.4 million reduction in payroll costs already implemented. There are also efforts to reduce overheard and administrative expenses by 10 percent and plans to "prune" the company's portfolio.
Supply chain issues have eased somewhat, according to Abulaban, and global industry production grew more than 16 percent in the first quarter, but executives remain concerned about vehicle production volatility, cost inflation and macroeconomic uncertainty in the second half of 2023. They have slightly reduced their revenue outlook for the year down to a range of $1.55 billion to $1.63 billion.
Unit shipments increased over the previous quarter in North America because of growth in fleets, while they continued to decline in Europe because of persistently elevated gasoline and energy costs and an unusually warm winter. These factors led to consumer inflation and recession concerns and increased use of all-season tires, Trenary said.
Shares in Superior Industries fell 19 percent to close at $3.85 in midday trading on Thursday.
