Chicago Rivet & Machine Co. reported fastener sales for the second quarter of 2019 declined 13.5% to $9.03 million. Fastener sales to automotive customers fell 16.5% to $4.9 million “as demand from such customers has been particularly weak in the current year due to changes in consumer preferences and lower vehicle sales domestically and even more so abroad.” Non-automotive fastener revenue dipped 7.9% to $2.94 million in Q2.

Fastener segment operating profit decreased 60% to $487,305, while gross margins slipped 40% to $1.22 million during the quarter. Segment capital expenditures rose 1% to $284,573.

“Overall results for the second quarter were disappointing, primarily due to the softening demand in the fastener segment, which followed the global downturn in automotive activity during the first six months of the year,” the company stated. “Additionally, increases in steel prices and other materials over the past year have negatively impacted our fastener segment gross margins and remain a concern as ongoing trade disputes persist.”

Fastener sales during the first six months of 2019 fell 14.3% to $15.4 million, with sales to automotive customers down 19.4% to $9.6 million. Non-automotive customer sales decreased 4.1% to $5.8 million.

First-half fastener segment operating profit declined 55% to $1.08 million, while gross margins dropped 36.8% to $2.54 million. Segment capital expenditures more than doubled to $1.04 million.

“In addition to the negative impact lower sales have had on gross margins, production costs in the first half of 2019 were higher than a year earlier,” the company stated. “Steel is our primary raw material and on average, steel prices were approximately 12% higher in the first half of 2019 than a year earlier, primarily due to tariffs instituted in 2018.

“Labor costs have also risen more than expected due to the tightening of the labor market.” Web: ChicagoRivet.com