Lower operating income in the T/A Metals segment was due to lower net sales and the unfavorable mix in sales between automotive parts and tooling, as higher margin automotive parts net sales decreased by $4.7 million in Q1 2013 compared to Q1 2012.
Also, operating income for the T/A Metals segment was negatively impacted by unfavorable absorption of fixed overhead costs and increases in selling expenses and administrative salaries and benefits expenses. The decrease of $0.8 million in Performance Materials segment operating income was caused by lower net sales in Q1 2013 and a gain of $0.4 million from services provided under a license agreement in Q1 2012.
Dale Barnhart, President and Chief Executive Officer, stated, “Overall, Lydall delivered good results for the first quarter of 2013 despite the continued challenge of soft demand for our products in Europe. Unstable economic conditions in this region resulted in lower demand for Industrial Filtration products and automotive parts.
"Despite the continued uncertainty in the macro-economic environment, we remain cautiously optimistic going into the second quarter of 2013. We are seeing signs of improved demand in Europe for Industrial Filtration products and expect to continue to benefit from strong demand in North America for automotive parts.
“I am also very pleased to announce that Lydall T/A Metals is in the process of establishing a new manufacturing facility outside of Shanghai, China. This business will produce metal parts in order to satisfy the local demand in one of the largest and fastest growing automotive markets in the world.
"Our customers have consistently been requesting that we expand our global presence, and we are excited to further serve their needs with our bestin- class products. We anticipate that our facility will be fully operational in the first half of 2014.”
Lydall Inc