Manufacturing conglomerate Carlisle Cos. Inc. wants to shed its $200 million automotive group, which is on track for a loss this year even as sales begin to rebound.
Carlisle Engineered Products Inc., Carlisle's Crestline, Ohio-based automotive unit, posted $146.8 million in sales through the first nine months of 2004, up from $140.8 million for the same period the previous year. But it also had a loss of $554,000 counted in earnings before interest and income tax, compared to a gain of $2.6 million for 2003.
The Charlotte, N.C.-based parent did not identify potential buyers, but said it expects to complete a sale by year's end.
In July, Carlisle put the rubber operations of Carlisle Engineered Products up for sale, along with a plastics molding factory in Trenton, S.C., that is part of its Carlisle Tire & Wheel Co., and a pottery plant in Carlisle FoodService.
The auto unit includes a variety of interior and exterior molded components, with about $150 million in injection molding alone. It also has blow molding, extrusion and thermoforming capabilities.
In the past few years, sales and profit for the group have dropped as the North American auto industry slowed. Sales were picking up in 2004, the company noted in its third-quarter filing with the Securities and Exchange Commission, but raw material costs were climbing even faster.
All of Carlisle's operations paid an extra $17.8 million in raw material costs for the third quarter alone, and $33.8 million through the first nine months of the year.
The auto unit claimed $3.4 million in ``excess manufacturing and inspection costs'' in the second quarter and $2 million in the third quarter that it blamed on defective tooling from a customer.
The fact is, $200 million in annual sales for the auto industry does not provide much leverage for suppliers these days, said Thomas Blaige, chief executive officer of investment bank group Thomas Blaige & Co. LLC of Chicago.
Carlisle can exit the business, and plenty of other industries still will offer a stronger platform, he said.
The auto unit could attract existing manufacturers or financial buyers, noted an industry watcher who asked not to be named.
The group's product portfolio would meld well with a firm like Plastech Engineered Products Inc. or Key Plastics LLC, he said. A financial buyer could create one solid company with two midsize purchases by combining CEP with auto supplier Sarnamotive of Marysville, Mich., which also is for sale, he said.