Absenteeism | COVID-19: the “nightmare” at Héroux-Devtek

(Longueuil) The rise in absences linked to COVID-19 has caused “a nightmare” on the Héroux-Devtek production line, says its president and chief executive officer, Martin Brassard. The Quebec manufacturer of landing gear unveiled “disappointing” results that overshadowed the signing of a contract with Boeing.

Updated yesterday at 4:16 p.m.

Stephane Rolland
The Canadian Press

Héroux-Devtek President and CEO Martin Brassard said the number of reported cases quadrupled in the first quarter (from April to the end of June) compared to the same period last year. Its suppliers have also seen their activities disrupted by the seventh wave. “It was like a nightmare,” the leader said in a phone call with analysts on Friday.

Nearly 200 employees out of a workforce of 1,800 had to be absent during the first quarter. Workers in isolation leave “holes” in the production line, which slows down work in factories, the leader explained.

This is not the first time that a pandemic wave has disrupted the activities of the Longueuil company. In November and December, nearly 200 people contracted COVID-19, which had eroded 10% of the revenue hoped for by management.

These difficulties arise at a time when the job market is tight. “We are having difficulty filling the positions offered, but we have managed to mitigate this problem while we have 95% of the workforce we need. Despite everything, the turnover rate is higher than usual. »

The difficult operating environment was known, but the situation is worse than analyst Tim James of TD Securities had anticipated. “No factor identified is a surprise, but the magnitude of the problem compared to the previous quarter is surprising. »

Results below expectations

In this difficult context, Héroux-Devtek unveiled results that were well below market expectations. Mr. Brassard himself described his results as “disappointing”.

In the first quarter, net income fell nearly 85% to $965,000, compared to $6.7 million for the same period last year. Revenues, for their part, fell by 9.6% to 114.1 million.

Diluted earnings per share were 3 cents versus 19 cents. Prior to the earnings release, analysts had expected a profit of 20 cents, according to data firm Refinitiv.

During the conference call, Mr. Brassard insisted on the fact that the conditions of the military and civil aeronautics market were not in question in the quarterly poor performance.

Demand is not an issue. The challenge is to produce consistently and continuously due to supply chain challenges, inflation and labor constraints.

Martin Brassard, President and CEO of Héroux-Devtek

He also indicated that the company’s order book “remains strong”, which would allow it to increase its sales in the coming quarters.

The company’s difficulties overshadowed the conclusion of a contract with Boeing, which had already entrusted it with the manufacture of the landing gear for the 777 and 777x aircraft.

The new contract provides for the repair and maintenance of main landing gear and side struts for Boeing’s F/A-18E/F Super Hornet and EA-18G Growler aircraft under the maintenance contract that the giant American was hooked by the United States Navy in 2021.

The first part of the contract covers 40 aircraft; it should subsequently be the subject of options and aims to support the entire US Navy fleet, which has more than 600 aircraft.

The stock lost 1.06 cents, or 7.24%, to $13.59 at the close of trading on the Toronto Stock Exchange.

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