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FEATURE
Fastener Margins Slim Despite Record U.S. Auto Sales

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“U.S. car sales in 2015 jumped to a record, clearing a peak last reached 15 years ago as cheap gasoline, employment gains and low interest rates spurred Americans to snap up new vehicles,” the Wall Street Journal reports.

Auto makers sold 17.5 million cars and light trucks in the U.S. last year, a 5.7% increase. 

But while those sales generated more revenue for many automotive fastener businesses, profits were more elusive.

From the annual FIN Stock Review on GlobalFastenerNews.com:

Anixter International auctioned its Fasteners segment in January 2015, prompting a $380 million deal with American Industrial Partners. The transaction included 73 distribution centers, 12 labs and 1,900 employees. The business has been renamed Optimas OE Solutions, LLC and will remain headquartered in Glenview, IL. Optimas is Latin for “of the best.” 

Automotive products supplier Chicago Rivet & Machine Co. said full-year fastener segment sales fell 4.5% to $32.6 million, including a 2.6% drop to $7.8 million during Q4. “Our fastener segment, which relies on the automotive sector for the majority of its revenues, was supported by another year of growth in domestic automobile and light truck sales, however, our sales to certain export markets experienced significant declines,” the company stated.

Dorman Products reported sales, including fasteners, increased 7% to $803 million in 2015., while gross profit margin edged up to 38.4%. “This year marked our 15th consecutive year of sales growth,” stated CEO Matt Barton.

ITW reported Automotive OEM organic revenue, including fasteners, totaled $2.53 billion, with operating income of $613 million and operating margin of 24.2%. In January 2016, ITW announced a deal to acquire the global automotive Engineered Fasteners and Components business of ZF TRW for $450 million. Enkenback, Germany-based ZF TRW Engineered Fasteners and Components operates 13 locations with a global manufacturing and engineering footprint that serves its customers in Europe, Asia, and North America. The business has 3,500 employees located in nine countries.

Stanley Black & Decker reported revenue for its Industrial segment, including results for its Engineered Fastening business, dropped 5.2% to $1.94 billion, with profit down 3% to $339.9 million. Stanley Black & Decker reported revenue for its Industrial segment, including fasteners, declined 7% to $477 million in the fourth quarter of 2015. Engineered Fastening saw “strong automotive revenues more than offset by market related declines within Electronics and Industrial,” leading to a 1% organic growth decline.

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