In advance of its Q2 2019 report, Bulten AB has announced that is earnings for the period ‘deviate negatively’ from previous levels by around SEK 25 million due to lower production rates in order to adjust inventory levels against demand.
During the second quarter, the decline in the light vehicle market, which began in the last six months of 2018, continued, and the market situation was reflected in Bulten's volumes. The earnings have been negatively affected by lower volumes, but also by a lower production rate in order to balance inventory levels against demand. This has resulted in a lower capital tied up, but at the same time a lower utilisation of the production units' capacity and thus an under-absorption in the operations. The lower production rate is expected to affect earnings negatively by approximately SEK 25 million in the second quarter. Bulten said in its first quarter interim report that it intended adjusting inventory levels.
“We are not satisfied with the development during the quarter, but the production adjustment has been necessary in the current market situation,” said Anders Nyström, president and CEO. At present, demand is still somewhat weaker than in the previous year and the ramp-up of the new contracted volumes has been more prolonged. Given these conditions, the production rate will continue to be lower at the beginning of the third quarter, but not to the same extent as during the second quarter.”
Anders Nyström emphasised that Bulten has received contracts at an annual value of just over half a billion SEK at full production rate in 2021, adding “we have a continued strong position”. During the first six months of 2019 Bulten has taken several smaller contracts, with a total value of around SEK 20 million.
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