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Apr 29, 2022

NFI cuts forecast - again - as supply snarls hit production line

Greg Newman discusses NFI Group


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Bus manufacturer NFI Group Inc. is cutting its revenue forecast for the second time in seven months, citing a global shortage of microprocessors.

The announcement Friday set off a 25 per cent plunge in the company's share price from the previous day's close of $13.87, followed by a slight rebound to $11.52 in late-morning trading.

NFI North American bus segment president Chris Stoddart says a dearth of control modules — a key component in computer microprocessors — means lower-than-planned deliveries in the second and third quarters as otherwise completed vehicles languish in inventory.

The Winnipeg-based company, which has delivered buses to the Toronto Transit Commission for more than 50 years, says it is working with alternative suppliers but expects it will need to lower production at some plants.

The bus maker now forecasts between $2.3 billion and $2.6 billion in revenue and adjusted earnings of $15 million to $45 million this year, rather than the previously predicted revenue of $2.5 billion to $2.8 billion and adjusted earnings between $100 million and $130 million.

Rather than positive adjusted earnings in both halves of the year as stated in March, NFI now expects to be in the black only in the fourth quarter.

"Our people are doing everything they can to address these issues by going multiple levels down into our supply chains, using alternative components, and working directly with customers on delivery schedules and pricing adjustments,” CEO Paul Soubry said in a statement.

The company also cited supply chain snarls in September that left it short of critical parts and chassis, prompting it to push down its guidance for 2021.