Summary:
Uni-Select claim that the deadly Japanese earthquake won’t limit its access to automotive parts, since less than 10% of the auto parts distributors originate from the part of Japan that is hit by an earthquake and tsunami. Most of its parts come from south of Tokyo, which wasn’t dramatically impacted. The company’s profit surged to $10.8 million in the 4th quarter though sales slipped by 2%. Its dividend increased to 12 cents per share, up from 11.65 cents in the 3rd quarter. Earnings from continued operations more than doubled during the quarter; but it didn’t meet the expectation of analysts due to pressures of the loonies being near parity with the U.S. dollar. To reduce currency fluctuation, Uni-Select is switching its reporting currency to U.S. dollar following the acquisition of FinishMaster.
Connection:
Though sales slipped during the fourth quarter, Uni-Select’s profit surged to $10.8 million. This increase in net income will have a positive effect on its operating activity, which will increase the amount of cash in the cash flow statement. Uni-Select also increases its dividend by 3%; this will affect its financing activities. The increase in dividend will decrease the amount of cash available to the company. The article also mentions that Uni-Select acquired FinishMaster, a painting company, for $217 million. This will have a negative affect on investing activities; thus less cash will be available.
Reflection:
I believe that the Japanese earthquake will curtail Uni-Select’s access to automotive parts in Japan. After the earthquake, access to electricity in Japan has become a huge issue to the whole country. Areas that were not hit by the earthquake were limited to the access of electricity, as the Japanese ran into an electricity shortage. With the shortage of electricity, automaker will have a difficult time producing automotive parts for companies such as Uni-Select. In addition to that, as the Canadian dollar reached a 3-year high on April, Uni-Select is likely to experience another slip in sales due to currency fluctuations.
Your blog overall was easy to read. I was able to follow the connections made from your summary and I think your reflections are rather insightful. I also agree with your reflection about Japan's shortage of electricity. I also think that people living in Japan won't be as eager to spend their Yen on buying automotives and instead save up their money for future emergencies which are very real for them right now.
ReplyDelete- G. Wong
After reading your blog I agree with your reflection about Japan's shortage of electricity and without electricity Uni-Select will have a difficult time producing automotive parts. Also with the recent earthquakes many people will rather save up their money and use it for their needs like food, water, etc. This can also affect Uni-Select's net earnings and their profitability will decrease which will cause problems in the future.
ReplyDeleteYour blog is clearly mentioned about the effect on cash flow in the three types of activities. There is less cash for Uni-select after its acquisition of Finishmaster. It will have a negative effect in the cash flow of investing activities initially, but it can expand the size of company and make a bigger profit. I agree with your reflection that Japan's electricity shortage cause a really big obstacle to Japanese economy. Japan probably needs a pretty long period to recover these bad consequences that caused by this huge tsunami.
ReplyDeleteYour summary covers all the key points of the original article, and it is very concise and easy for the readers to follow. However, I think you could have been more specific by including some major financial impacts of the earthquake on the company in your connection. Although he acquisition of FinishMaster might decrease the inflow of cash, but it helps the company boost up their strength and open more options. It would eventually bring in more cash in the long run. Also, I disagree with your reflection about Uni-Select’s access to automotive parts in Japan. From my own perspectives, only 10% of the auto parts distributors were affected by the earthquakes, so overall it does not impact Uni-Select dramatically. Besides, Japan is tying its best to recover from the catastrophe under the helps from countries all over the world, so I believe the shortage of electricity would not be an issue in japan in the near future.
ReplyDelete