Losses at its cutlery business, combined with a steep drop in earnings from its motion-control equipment segment, led to an 84 percent plunge in Servotronics Inc.’s fourth-quarter profits, the Elma manufacturer of motion-control equipment and cutlery said.
Servotronics was stung by double-digit drops in sales at both its main businesses, causing its overall revenues to slide by 13 percent, while the company’s earnings also were hurt by lingering losses stemming from the sale and shutdown of a pair of small consumer knife businesses.
The company’s profits tumbled to $95,000, or 4 cents per share, compared with $588,000, or 27 cents per share, a year earlier. All of the profits came from the company’s weakened earnings from its motion-control equipment business; those earnings offset continuing losses at its cutlery business.
Beyond that, Servotronics absorbed $150,000 in losses resulting from the $650,000 sale in September of its Queen Cutlery Co. pocketknife business in Pennsylvania, coupled with the shutdown of its Aero Metal Products unit in Arkansas, which made scissors and shears.
Excluding the impact of the discontinued cutlery businesses, Servotronics’ remaining businesses continued to be profitable, but their operating profits plunged by 72 percent, to $301,000 from $1.07 million a year ago.
Overall, Servotronics’ sales slid by 13 percent to $7.2 million from $8.3 million, as the company’s cutlery revenues fell by 19 percent due to declining knife purchases by the U.S. military, and its motion-control equipment sales dropped by 11 percent.
Servotronics’ Advanced Technology Group, which accounts for nearly three-quarters of the company’s sales, saw its operating profits drop by more than half, to $360,000 from $863,000 a year ago, while the unit’s sales fell to $5.3 million from $6 million the year before.