Linamar CEO Delays Goal of C$10 Billion Sales by 2020

Linamar Corp. (LNR), Canada’s second-largest auto-parts maker, is unlikely to meet its goal of almost tripling sales by 2020 due to capital costs and labor shortages.

Linamar has pushed back its plans of reaching C$10 billion ($9.2 billion) in sales in the next six years because of the cost of growing that quickly and the need to find and train staff, Chief Executive Officer Linda Hasenfratz said today in Winnipeg, Manitoba. Growing 10 percent a year will give the company more cash flow and maintain good returns for shareholders, she said.

“If all that works out then we should still be at C$10 billion in the early 2020s, somewhere around 2023, 2024,” she said after a speech to business school students.

Hasenfratz pledged in a February 2013 interview with Bloomberg to triple sales to C$10 billion and reach profit of C$1 billion by 2020. The Guelph, Ontario-based company reported sales rose 12 percent to a record C$3.6 billion in 2013 and record profit of C$229.8 million.

Linamar assembles vehicle engines and transmissions and designs and builds gear systems at factories in North America, Europe and Asia.

The company expects to see continued growth as automakers, including Ford (F) Motor Co. and Chrysler, outsource more engines and transmissions, Hasenfratz said. Sales in Europe are expected to double in the next three years to C$1.2 billion and to more than C$500 million in Asia, she said.

“It’s a massive market so even small changes in what’s outsourced can spin off significant opportunities for us,” she said.

Linamar was little changed at C$61.71 at 4:05 p.m. in Toronto. The parts maker has risen 40 percent this year and reached a record high of C$63.84 on May 14 on renewed car demand.

(An earlier version of this story corrected the currency to Canadian dollars.)

To contact the reporter on this story: Jen Skerritt in Winnipeg at jskerritt1@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net Jacqueline Thorpe

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