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May 13, 2011 /PRNewswire/ -- Servotronics, Inc. (NYSE Amex - SVT) reported net income of
$0.21 per share Basic -
$0.19 per share Diluted) on revenues of
$8,275,000 for the first quarter ended
March 31, 2011 as compared to net income of
$0.32 per share Basic -
$0.29 per share Diluted) on revenues of
$7,884,000 for the comparable period ended
March 31, 2010. The 5% increase in revenues is attributable to increased product sales at the Company's Advanced Technology Group (ATG) which exceeded a decrease in product sales at the Consumer Products Group (CPG). Net income was adversely affected by product mix, write-off of start-up costs related to new product lines/products, product development expenses and ramp-up costs to meet customers' forecasted increases in product requirements. Cost containment efforts, operational consolidation evaluations, equipment updating, procurement cost reductions, outsourcing and other front-end expense producing activities that are necessary to produce long-term benefits are continuing with high priority.
As the Company previously reported, certain major manufacturers of commercial aircraft have publicly announced that they have implemented plans to ramp-up production to support their customers' forecasted increases in aircraft deliveries in 2011, 2012 and beyond. Aircraft component suppliers such as Servotronics have been customer advised to increase their manufacturing capabilities to support the forecasted increases in aircraft production. Although certain economists are stating that the current recession is in a recovery mode that may have the potential to be self-sustainable, they are also cautioning that the economy is subject to inflationary pressures that result from the substantial U.S. Government increases in the money supply that were originally intended to support and stimulate the economy. In 2010, the domestic Aerospace Industry's exports exceeded foreign Aerospace Industry imports by approximately a plus
$50 billion - down by approximately
$2 billion year to year. The total net effects of the Japanese earthquakes and the extensive damage to certain Japanese nuclear power plants on the world economy are yet to be fully quantified and, when quantified, are not expected to significantly affect Servotronics.
Government procurements are expected to continue to be volatile and may result in significant period to period product delivery variances at the CPG and, to a lesser degree, at the ATG. The Company's aggressive marketing efforts are enhanced by ongoing product developments at both the ATG and the CPG. The Company continues to expand its capabilities by adding product lines, new products and resources to the Company's inventory of skills and expertise while simultaneously evaluating operational consolidation alternatives. The Company's product developments, expanded capabilities and the recovering global economy are expected to be beneficial to the Company's operations and the formation of a larger foundation for future growth.