UPDATE 2-Spartan Motors Q4 profit up on strong chassis sales
(Adds analyst's comments, details; updates share movement)
By Aniruddha Basu
BANGALORE Feb 14 (Reuters) - Automotive chassis maker Spartan Motors Inc (SPAR.O: Cotización) posted a strong quarterly profit that beat Wall Street estimates by a wide margin, driven by robust sales at its chassis and emergency vehicle team units, sending its shares up by as much as 16 percent.
"The long and the short of it was that revenues were higher than anybody expected on the Street. It was a much better revenue in all segments," Robins Group analyst Frank Magdlen said.
Sales at Spartan Chassis, the company's largest operating unit, rose 86 percent to $211.2 million in the fourth quarter, riding on growth in military orders and service, parts and accessories business.
The military business is expected to peak in the second and third quarters of 2008 due to a number of July deliveries coming up, but may decline substantially in the fourth quarter, Magdlen said.
The military is only ordering a specific number of Mine Resistant Ambush Protected (MRAP) vehicles, but its demand for these vehicles have dipped, which is why the business is expected to drop in the fourth quarter, Magdlen added.
Spartan, which makes chassis assemblies for recreational vehicles (RV) and fire and rescue trucks, is one of the many companies that have rushed into the market for the new class of heavy-duty military vehicles, designed to reduce U.S. combat deaths from roadside bombs in Iraq and Afghanistan.
"This is a market that didn't even exist in 2004. It was an opportunistic expansion of their product lines," Magdlen said. Continuación...