Servotronics Inc.'s first-quarter profits tumbled by 85 percent as lower sales of military knives caused losses at its cutlery business to more than double, the company said Tuesday.
The Elma manufacturer's profits fell to $63,000, or 3 cents per share, from $418,000, or 19 cents per share, a year earlier, as operating profits weakened at both of the company's business units, which produce motion control equipment and cutlery.
Servotronics executives blamed the weakened profits on a more than $500,000 drop in sales of military knives, coupled with higher product-development and start-up costs associated with new product lines.
The company's sales inched up by 1 percent to $8.4 million from $8.3 million, as a modest increase in revenues at its Advanced Technology Group offset a small drop in sales at its cutlery business.
Pre-tax profits weakened by 16 percent at the company's Advanced Technology Group, where earnings slipped to $674,000 from $802,000 a year ago. Sales of its motion control equipment, which account for almost two-thirds of Servotronics' total revenues, rose by 4 percent to $5.3 million from $5.1 million.
Pre-tax losses more than doubled at the company's cutlery business, which lost $586,000 during the first three months of the year, compared with a loss of $205,000 a year ago. Sales dipped to $3.1 million from $3.2 million, as military knife sales dropped by $509,000, the company said in a filing with the Securities and Exchange Commission.