Mar­t­in­rea ex­pects trade deal boost

National Post (Latest Edition) - - FP INVESTING - Ian Bickis

TORONTO • Mar­t­in­rea In­ter­na­tional Inc. says it’s only been min­i­mally af­fected by tar­iffs and ex­pects a boost from changes to the North Amer­ica trade agree­ment.

Ex­ec­u­tive chair­man Robert Wilde­boer said in a con­fer­ence call Fri­day that the com­pany had seen about $2 mil­lion in terms of to­tal costs from tar­iffs, but that an ex­emp­tion will see those costs go down.

“Our U.S. tar­iffs that we have to pay on steel and alu­minum, to the ex­tent that we did have to pay, we re­ceived ex­emp­tions from the U.S. gov­ern­ment the last month for most of them. So ef­fec­tively, we’re even less im­pacted on that go­ing for­ward.”

He said smaller in­dus­try play­ers have, how­ever, been more af­fected.

“That’s one of the things that we say in terms of urg­ing for the in­dus­try that the tar­iffs no mat­ter how you look at it po­lit­i­cally, they’re hurt­ing peo­ple in smaller sup­pli­ers, and things are go­ing to pop in cer­tain sit­u­a­tions.”

The Toronto-based com­pany, which has siz­able op­er­a­tions in the U.S. as well as Canada and else­where, said Cana­dian tar­iffs still ap­ply and that the whole sit­u­a­tion is be­ing com­pli­cated with ex­emp­tion ap­pli­ca­tions. Wilde­boer said the so­lu­tion is sim­ply to get rid of the tar­iffs al­to­gether.

“There are a lot of ex­emp­tion ap­pli­ca­tions pil­ing up, but one way to deal with that and a po­ten­tial need for ex­emp­tions is to get rid of tar­iffs. So that’s why we’re ad­vo­cat­ing that.”

The U.S. ad­min­is­tra­tion im­posed tar­iffs on Cana­dian and Mex­i­can steel and alu­minum at the end of April and has also ramped up tar­iffs against China.

Both Canada and Mex­ico have been push­ing for an end to metal tar­iffs ahead of the sign­ing of the United States-Mex­ico-Canada Agree­ment at the end of No­vem­ber.

Wilde­boer said Mar­t­in­rea is set to ben­e­fit from the in­creased North Amer­i­can con­tent re­quire­ments on au­tos in the new trade agree­ment.

“If you’re buy­ing parts over­seas, which a lot of OEMs still do, there’s a lot of in­cen­tive un­der the new rules to bring that into the United States, Canada or Mex­ico. And so for us, we see this as a great op­por­tu­nity.”

The com­pany earned a record $36.4 mil­lion in the third quar­ter de­spite mod­est tar­iff ef­fects and for­eign ex­change losses.

The man­u­fac­turer said it earned 42 cents per share for the pe­riod ended Sept. 30. That’s un­changed from the prior year when its net in­come was $36.2 mil­lion.

Ex­clud­ing one-time items, ad­justed prof­its rose for a 16th con­sec­u­tive quar­ter, reach­ing $37.2 mil­lion or 43 cents per share, be­low an­a­lyst ex­pec­ta­tions but up from $36.3 mil­lion or 42 cents per share a year ear­lier.

Mar­t­in­rea was ex­pected to earn 45 cents per share on $856.2 mil­lion in rev­enues, ac­cord­ing to an­a­lysts polled by Thom­son Reuters Eikon.

To­tal sales grew 1.5 per cent to $851.1 mil­lion, from $838.5 mil­lion.

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