Servotronics' fourth-quarter profits plunged by 77 percent as declining sales and potential cost overruns at its cutlery business hurt the Elma motion control equipment and consumer products manufacturer's earnings.
Servotronics' profits fell to $235,000, or 12 cents per share, from $1 million, or 52 cents per share, a year earlier.
The company's sales slid by 16 percent to $8.1 million from $9.7 million, as revenues declined at almost the same rate at both its consumer products and motion control equipment businesses. Operating profits at Servotronics' Advanced Technology Group were roughly flat at $1.3 million, even though revenues were down by 16 percent to $4.7 million from $5.6 million a year ago.
The company's consumer products business was hit harder, posting an operating loss of $510,000 during the quarter, compared with a profit of $519,000 a year earlier.
The consumer products business was stung by a $250,000 reserve that the company set up during the fourth quarter to cover potential cost overruns, according to a filing with the Securities and Exchange Commission. The cutlery business' sales dropped by 15 percent to $3.4 million from $4.1 million a year ago.
Servotronics officials said Tuesday that both the motion control equipment and consumer products businesses have been hurt by commercial customers delaying their purchases because of the weak economy.
Servotronics executives also said they were encouraged by the predictions from major commercial aircraft makers that deliveries could start to increase late this year and continue growing into 2012.