The lightning progression of the Omicron variant in December will have eroded nearly 10% of the revenues expected by Héroux-Devtek in the third quarter, estimated Wednesday the manufacturer of landing gear, whose results were not, for a rare time, met analysts’ expectations.
“We had the plan to generate 10% more sales,” said Martin Brassard, its president and CEO. It was a solid plan at the start of the quarter. Unfortunately, what happened in December was too quick. »
Nearly 200 of the approximately 1,800 employees of the Quebec company had contracted COVID-19 between the start of the pandemic in March 2020 and last November, reports the manager. By November and December, that number had doubled to 400, showing how quickly the variant has spread compared to previous strains.
Illness-related absences at Héroux-Devtek, but also at its suppliers, disrupted production, explained Mr. Brassard. “An example that happened to us in December, just before Christmas: we have four painters at our factories in Cleveland, and all four have caught COVID-19. We had no choice but to go outside to do the painting. It adds costs. »
Disappointing results
These difficulties manifested themselves in the fourth quarter financial results. Net income fell 23.8% in the three months ended Dec. 31 to $6.5 million. For their part, revenues declined by 12.7% to 131.1 million. Adjusted earnings per share were 18 cents, compared to 26 cents in the same period a year earlier.
Prior to the earnings release, analysts had expected revenue of $144.6 million and adjusted net income of 24 cents per share, according to forecasts collected by Refinitiv.
Benoit Poirier, of Desjardins Capital Markets, said he was “disappointed” with the results, but he believes that this is an exceptional event for the Quebec company. In three years (12 quarters), this is only the second quarter where the company has announced adjusted earnings per share below expectations, he said. “Against this backdrop, we believe investors should not react on a whim to disappointment, especially as management has expressed optimism that it will be able to recoup lost revenue in the coming quarters. “commented the financial analyst.
In a conference call, Mr. Brassard did say that he expected the lost revenue to be recovered in the future. He said the company was still built on good fundamentals.