absenteeism | COVID-19: the “nightmare” at Héroux-Devtek

(Longueuil) The surge in absenteeism related to COVID-19 has caused “a nightmare” on Héroux-Devtek’s production line, says President and Chief Executive Officer Martin Brassard. The Quebec landing gear maker revealed “disappointing” results that overshadowed the signing of a deal with Boeing.

Updated yesterday at 4:16pm.

Stephane Rolland
The Canadian Press

Martin Brassard, President and CEO of Héroux-Devtek, said the number of reported cases quadrupled in the first quarter (from April to the end of June) compared to the same period last year. Its suppliers were also disrupted in their activities by the seventh wave. “It was like a nightmare,” the leader said in a call to analysts on Friday.

Almost 200 of 1,800 employees had to be absent in the first quarter. Workers in isolation are leaving “holes” in the production line, which is slowing down work at the factories, the director explained.

This is not the first time that a pandemic wave has disrupted Longueuil’s activities. During November and December, nearly 200 people fell ill with COVID-19, wiping out 10% of management’s hoped-for revenue.

These difficulties arise at a time when the labor market is tight. “We are struggling to fill the positions offered, but we have managed to mitigate this issue while having 95% of the workforce needed. Despite this, the turnover rate is higher than usual. »

The difficult operating environment was well known, but the situation is worse than TD Securities analyst Tim James expected. “None of the factors identified are surprising, but the magnitude of the problem compared to the previous quarter is surprising. »

Results below expectations

In this difficult environment, Héroux-Devtek presented results well below market expectations. Mr. Brassard himself described his results as “disappointing”.

For the first quarter, net income fell nearly 85% to $965,000 compared to $6.7 million for the same period last year. Turnover, for its part, fell by 9.6% to 114.1 million.

Diluted earnings per share were 3 cents versus 19 cents. Before the earnings release, analysts had expected earnings of 20 cents, according to data company Refinitiv.

During the conference call, Mr. Brassard insisted that the quarterly poor performance did not call into question the conditions in the military and civil aviation markets.

Demand is not an issue. The challenge is to produce consistently and continuously due to supply chain challenges, inflation and labor restrictions.

Martin Brassard, President and CEO of Héroux-Devtek

He also noted that the company’s order book “remains strong,” which would allow it to grow its revenue in the coming quarters.

The company’s difficulties overshadowed its signing of a deal with Boeing, which had already entrusted it with manufacturing landing gear for the 777 and 777x airplanes.

The new contract provides for the repair and maintenance of the main landing gear and side struts for Boeing’s F/A-18E/F Super Hornet and EA-18G Growler aircraft under the maintenance contract the American giant took over from the United States Navy in 2021.

The first part of the contract includes 40 aircraft; It would later be a subject of options and intended to support the entire US Navy fleet, which has more than 600 aircraft.

The stock was down 1.06 cents, or 7.24%, to $13.59 at the close on the Toronto Stock Exchange.

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