Gentex Expects New Product To Drive Growth Significantly
ZEELAND — Gentex Corp. hopes to score double-digit growth in 2002, despite an expected decline in North American automotive production.
Further market penetration of its popular NVS automatic-dimming mirrors onto vehicle models, plus the initiation of new product programs featuring additional electronic features built into the mirrors, should enable the Zeeland-based Gentex to boost shipments by 15 percent to 20 percent this year.
“We’re optimistic about it and we’ll have to take the year as it comes, but we think there’s a lot of opportunities to have a good 2002,” Gentex Executive Vice President Ken La Grand told brokerage analysts during a Jan. 24 conference call to discuss the company’s 2001 and fourth quarter financial results.
The year saw Gentex post solid sales growth but lower earnings resulting from slowing auto production, heavy research and development spending and annual price cuts demanded by automakers that were not offset by productivity gains. Pricing pressures will continue, if not intensify, in the year ahead, further squeezing the company’s operating margin.
Gentex posted 2001 sales of $310.3 million, up 4.3 percent from the $297.4 million recorded a year earlier. Fourth quarter revenues totaled $79.7 million, a 6.5 percent increase from the $74.8 million during the same period in 2000.
Annual net income was $65.2 million, or 87 cents per share, down from the $70.5 million, or 95 cents per share, in 2000. Fourth quarter net income reached $16.8 million, or 22 cents per share, down from the $17.7 million, or 24 cents per share, recorded during the fourth quarter a year earlier.
The per-share earnings met the expectations of Wall Street analysts.
The forecast for increased mirror shipments in 2002 is based on J.D. Power and Associates estimates for North American production of 15.5 million light vehicles, down about 10 percent from 2001, and European production of 15.8 million vehicles.
La Grand expects the first quarter will emerge as the softest of the year, with the second half picking up as new product programs are launched and begin contributing to the bottom line. Early sales during the first few weeks of the first quarter have, so far, exceeded expectations, generating “cautious optimism,” he said.
The product launches — including a major new mirror program for one unnamed automaker — planned for the latter half of the year appear firm, despite talk by U.S. automakers of de-contenting some vehicle platforms to save costs.
“There’s a very high likelihood they’re going to come off as planned,” Senior Vice President Garth Deur said. “We don’t have any reason to believe right now these programs won’t happen.”
In addition to its annual and quarterly results, Gentex said last week that a third, unidentified automaker has committed to installing the SmartBeam headlight control system on its vehicles “in significant volumes,” La Grand said.
SmartBeam is designed to enable drivers to use their high-beam headlights more often when driving at night. Image sensors detect a vehicle ahead, whether it’s oncoming or traveling in the same direction, and fades the high beams to low beams. When no other traffic is present, it activates the high beams.
La Grand expects Gentex to begin production on SmartBeam for the mid-2004 to mid-2005 model years. He anticipates the company will produce 400,000 to 500,000 SmartBeam units during its first year.
The system, like Gentex’s NVS mirrors that were introduced more than a decade ago, will start out on high-end luxury vehicles and then work down to medium-price models, La Grand said. SmartBeam will add only about $60 to the cost of a vehicle.
“We think it’s going to be a popular feature if priced right to the retail customer,” La Grand said. “There are plans to use it quite widely.”