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© dr911-dreamstime.com Electronics Production | February 03, 2012

Kimball complete Welsh & Californian closures in 2Q

Fiscal year 2012 second quarter net sales in the EMS segment decreased 18% compared to the second quarter of the year prior, with decreased net sales to customers in the medical and industrial control industries.
James C. Thyen, Chief Executive Officer and President, stated, "In the EMS segment, we completed the exit of our Wales UK facility and our Fremont, California facility as final production ceased in both facilities in November. Second quarter earnings in the EMS segment were favorably impacted by cost benefits realized in conjunction with these closures."

Mr. Thyen continued, "Despite the success we achieved in the second quarter, our outlook remains guarded given the global economic challenges that persist and continue to drive volatility and uncertainty in our markets. Trade industry forecasts in both segments have shown a declining trend from previous forecasts."

© Kimball

The decline in net sales in the EMS segment resulted from the previously announced expiration of a contract with one medical customer late in fiscal year 2011 which accounted for a USD 36.6 million reduction in net sales in the current year second quarter compared to the second quarter of the prior year.

Excluding sales to this customer, current year second quarter net sales in the EMS segment increased 2% compared to the prior year. Sequentially, compared to the fiscal year 2012 first quarter, current year second quarter net sales in the EMS segment increased 4% on higher net sales to the medical and automotive markets.

Gross profit as a percent of net sales in the EMS segment for the second quarter of fiscal year 2012 improved 1.2 percentage points when compared to the second quarter of the prior year primarily related to a sales mix shift to higher margin product.

Selling and administrative costs in this segment declined 14% in the fiscal year 2012 second quarter when compared to the prior year as the Company realized benefits related to the closing of its Fremont, California and Wales, UK facilities which were completed during the second quarter. As a percent of net sales, selling and administrative costs increased 0.4 percentage points due to the lower sales volumes.

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