CHICAGO -- Gentex Corp., which makes self-dimming rearview mirrors for vehicles, on Wednesday said earnings fell on lower than expected North American sport-utility vehicle production, driving shares down 8.24 percent.
Short-term delays in new programs and lower-than-expected sales to certain main customers that are reducing inventories also hurt results, said Gentex, whose top customer last year was General Motors.
Net income fell to $26 million, or 17 cents per share, in the second quarter, from $29.0 million, or 18 cents per share, a year earlier, Gentex said.
Analysts, on average, expected Gentex to earn 18 cents per share, according to Reuters Estimates.
Revenue rose 2 percent to $132.4 million for Zeeland, Michigan-based Gentex, which also makes fire alarms. Total shipments of mirrors rose 3 percent to 3.1 million units.
Shipments rose 1 percent in North America, as shipments to Asian and European automakers more than offset lower shipments to the Big 3 U.S. automakers. However, gross margin was weaker than expected, mainly on slower growth in units shipped that led to a lower percentage of capacity use, Gentex said.
Production cuts were more severe than Gentex expected and capacity additions in 2005 also contributed to the pressure on margins, Morningstar analyst John Novak said.
"They have hefty margins and not a lot of competition, which protects Gentex to some extent, but no question they are getting pressure from automakers (on prices)," Novak said. "I expect a rebound from the quarter, but the rest of the year could be tough."
Sales incentives that have helped boost sales for the Big 3 U.S. automakers helped reduce dealer inventory, but did not lead to increased production in the second quarter that would boost Gentex results, the company said.
Gentex said it expects mirror shipments to be up from 5 percent to 10 percent in the third quarter and by 10 percent to 15 percent in the fourth quarter, from a year earlier.
Also on Wednesday, Gentex said BMW would introduce Gentex's SmartBeam headlights on its 5-, 6- and 7-series cars in Europe and other regions outside North America beginning in the fall.
Gentex ranks No. 128 on the Automotive News list of top 150 original equipment suppliers to North America with original equipment sales of $266 million in 2004.