VANCOUVER, BRITISH COLUMBIA – (April 28, 2011) Clearlease Reports Hammond Power Solutions Inc. (TSX:HPS.A) says its first-quarter profit was down 47 per cent compared with last year as a result of fluctuating material costs, competitive pricing in the market and higher sales and administrative expenses.
Net income dropped to just under $1.6 million from almost $3 million, while earnings per share dropped to 14 cents from 25 cents, the company announced Wednesday.
Hammond Power is the North American leader for the design of custom electrical engineered magnetics as well as the leading manufacturer of standard electrical dry type transformers
Its sales improved by 19 per cent to $52.8 million from $44.3 million, due to higher shipments to both American and Canadian markets. Gross margins fell to 24.3 per cent from 26.7 per cent in the first quarter of 2010.
Total selling, general and administrative expenses were $10.1 million, up $1.8 million or 21.8 per cent from a year earlier, due to higher sales commissions, the acquisition of Euroelettro SpA in Vicenza, Italy, and stock option expenses.
Margins are also feeling a negative impact from the lower U.S. dollar.
“We have seen the return of marked volatility presumably as a result of these uncontrollable events affecting material costs, market pricing, and booking activity from certain markets,” said Bill Hammond, chairman and CEO of the company.
Hammond’s shares were down 51 cents or 4.25 per cent to trade at $11.50 on the Toronto Stock Exchange.
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