Servotronics Inc.’s first-quarter profits nearly tripled, despite lower sales, as the restructuring of its cutlery business last year led to sharply lower losses from its knife business.
While Servotronics’ overall profits were up sharply because the restructuring eliminated a pair of money-losing knife businesses, the Elma motion control equipment and cutlery manufacturer’s profits from its continuing operations fell by 36 percent during the quarter – a sign that its remaining operations were significantly less lucrative during the first three months of the year.
Servotronics’ profits jumped to $177,000, or 8 cents per share, from $63,000, or 3 cents per share, a year earlier.
The company’s sales weakened by 9 percent to $7.3 million from $8.1 million a year ago, as revenues from its motion control equipment products inched up by 2 percent, while its cutlery revenues tumbled by 29 percent because of the restructuring and lower sales of military knives.
The shutdown of Servotronics’ Aero Metal Products business and the sale of its Queen City Cutlery Co. subsidiary eliminated two businesses that lost a combined $212,000 during the first quarter of 2012. The elimination of those losses allowed Servotronics’ overall profits to jump, even though remaining operations were weaker in the first quarter.
Excluding those two discontinued businesses, Servotronics’ earnings from continuing operations slid by 36 percent to $177,000 from $275,000 a year ago.
Much of that weakness was centered in its Advanced Technology Group, which makes sophisticated motion control equipment for aerospace and military customers.
Earnings from Servotronics’ advanced technology business tumbled by 58 percent to $330,000 during the quarter, from $463,000 a year earlier, despite a 2 percent increase in sales to $5.4 million. One reason for the weaker earnings from the motion control equipment business was a steep increase in capital spending, which jumped nearly eight-fold to $384,000 from $50,000 during the quarter.
The company’s cutlery business slashed its losses by more than half, mainly because of the elimination of the two money-losing businesses. Excluding the discontinued operations, the cutlery business’ losses narrowed by 19 percent, compared with a loss of $188,000 a year earlier.