Husky Injection Molding Systems Ltd. may defer some capital spending in its fiscal year 2000.
The Bolton, Ontario, firm announced Feb. 11 it expects lower-than-predicted profit in its second quarter and the rest of fiscal 1999. It said earnings per share will be 0-2 cents (U.S.) for the quarter ended Jan. 31. Analysts predicted 4-5 cents a share.
Husky blamed global woes for its slipping performance. Economic difficulties in Eastern Europe have caused overcapacity for PET bottles in Western Europe, hurting machinery sales. Brazil's currency devaluation has slowed South American sales. Continued economic uncertainty in Asia could cut Husky sales there by 10 percent in 1999.
One analyst said seasonality of PET molding machine sales could have disguised global factors in late fiscal 1998. Since sales are strongest in the third and fourth quarters, underlying global weakness could have been hidden for months, according to Rich Morrow, an analyst with CIBC Wood Gundy Securities Inc. of Toronto.
Husky recently finished its new hot-runner plant in Milton, Vt., and is starting another in Dudelange, Luxembourg. Those operations, and Husky's new components facility in Bolton, boosted floor space by 60 percent.
Husky Chief Financial Officer Steve Wilson said by telephone that the company will focus on expanding capacity, but where and how quickly it will proceed in 2000 is under review.
Robert Schad, Husky president and chief executive officer, also noted positive developments at Husky. The firm's Index PET preform molding system should boost Husky's share in the PET market, he said in a news release. Husky also boosted sales in automotive markets by 14 percent. Its market share should grow as a result of its new Detroit technical center, coming in July.
Husky had sales of US$140.5 million for the quarter ended Oct. 31. In the year-earlier period, sales were US$126.8 million.