Reko’s mold sales jump in Q3 2005 (June 13, 2005)
Canadian PlasticsCanadian Plastics
Challenging times for the North American automotive industry mean challenging times for its suppliers. However, one...
Challenging times for the North American automotive industry mean challenging times for its suppliers. However, one Canadian moldmaker that relies heavily on the automotive market, Reko International Inc. (Oldcastle, ON), has beat the odds and increased its sales in the third quarter (Q3) of 2005.
Reko sold 18% more molds during Q3 2005 as compared to Q3 2004, the company announced last week. Overall, Reko’s sales for the three months ending April 30 were $27.2 million as compared to $25.1 million in Q3 2004.
Reko designs and manufactures plastic injection molds, compression molds, dies, fixtures, automation, special machine and CNC machining centres.
The firm credits its Q3 2005 success to its strategy of aligning its engineering and machining capabilities with the large Tier-1 automotive companies so it can deliver programs with shorter leader times.
Additionally, Reko’s sales of dies and metal stampings increased significantly during Q3 2005. Over the past year, the industry as a whole saw a dramatic decrease in the production of prototype dies and parts because lower demand and pressure to reduce prices caused many prototype shops to close, the company explained.
However, Reko’s sales of dies and metal stampings increased because it was able to win customers from the shops that closed, the firm reported.
Reko’s gross margin for Q3 2005 was $3.1 million or 11.2% of sales, compared to $3.2 million or 12.9% of Q3 2003. Competitive pricing, caused by weak demand in the industry, affected the margins, Reko explained. As well, material price increases for steel and resins also put pressures on margins.
To offset these pressures, Reko plans to reduce costs by making fundamental structural changes and managing a more focused work force.
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