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Gentex lowers third quarter expectations
Gentex Corp. has lowered its previous estimate of results for the third quarter ending Sept. 30, due to a decline in auto sales and economic turmoil.
The Zeeland automobile mirror manufacturer estimated in July that revenues in the third quarter and balance of the year would be approximately 10 percent higher than the same periods in 2007, based on the mid-July light vehicle production forecast of CSM Worldwide.
Since then there have been announcements of light vehicle production cuts, plant shutdowns, decline in vehicle sales in both the United States and Europe, and turmoil in the financial markets.
In an announcement released Monday, Gentex now predicts revenues in the third quarter will decline by approximately 5 percent compared with the same period last year. Primarily due to the lower sales level, Gentex will be unable to leverage its fixed manufacturing overhead costs, which will negatively impact its gross margin. In addition, due to the significant downturn in the equities markets, Gentex now expects that its realized gains/losses on the sale of equity investments will be approximately $4 million lower than the second quarter.
"While we are not satisfied with the third quarter results, the reasons for the decline in top line growth are due to macroeconomic conditions that are well beyond our control," said Gentex Chairman of the Board and Chief Executive Officer Fred Bauer. "And, despite the gloom and doom in the economy and financial markets, by many other measures Gentex is doing well, as we remain very profitable, are financially sound and have a very strong balance sheet. We do not currently expect to change our dividend policy based on the existing tax treatment of cash dividends, and we currently expect to continue to execute the company's share repurchase plan that has been in place since 2003."
Gentex will announce the actual third quarter results Oct. 21.
Gentex based its new estimate on CSM Worldwide's mid-September light vehicle production forecast, which predicts that light vehicle production units for the third quarter will be 3 million for North America, 4.9 million for Europe and 3.5 million for Japan and Korea.