GUELPH, Ontario -- Linamar Corp., the Canadian parts maker, on Monday said it intends to generate $10 billion in sales by 2020, a plan that will require making heftier acquisitions than it has typically done.
To achieve that target, the company has to notch up sales and earnings growth of 20 percent a year in the near term -- over the next five years -- before ramping down to 10 to 15 percent growth, it said.
Chief executive Linda Hasenfratz said Linamar, which has in recent years made small acquisitions at a rate of between one or two a year, has yet to make a "significant" purchase, something likely to be necessary to meet its revenue target.
"There may be need to do that at some point in our future in order to get the critical mass that we need to be a tier one supplier in the automotive world," she said in an interview. "Typically we've been buying things in the $50- to $100- million revenue range. Something significant would be in the $400- to $500 million range and up.
"There's nothing on the radar screen right now but it's not something we would not entertain."
Linamar, which makes precision components for vehicle engines, transmissions and chassises, posted $1.357 billion in sales in 2002.
Hasenfratz characterized 2004 as "a digestion year" for the company while it absorbs the acquisitions it has made over the past 18 months.
She said the company would offer a more detailed outlook when it presents fourth quarter results but forecast Linamar would post "double digit earnings growth in 2004 over 2003."
At an investor presentation, Linamar, which gains only a small portion of overall sales from Asian automakers, said it is setting up office in Asia this year, initially in China then Japan, to help make strides in that market.
Though the new office is mainly to help Linamar find cheaper sources for raw materials, Asian automakers are firmly in the company's sights, Hasenfratz said.
"They're not a significant part of our customer base but they are an area that we're looking to grow significantly," she said.
"We do have a few contracts with them which is quite important because getting those first few contracts is something that takes a long time. But once you're in the door, it makes it easier to win supplemental business."
The Big Three U.S. automakers -- GM, Ford and Chrysler, the U.S. arm of DaimlerChrysler -- accounted for about 35 percent of Linamar's third quarter sales.
Earlier on Monday, Linamar said it would pay $18.2 million to terminate deals with Detroit-based sales agents and focus instead on building up its own fledgling sales organization.
The buyout, which will result in a one-time cost in the fourth quarter, is meant to cut costs and put the Linamar name in the spotlight. Adding new sales staff will cost $4.4 million a year starting in 2004.