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Audiovox reveals plan to return to profitability

 18 September 2008      

NEW YORK - Audiovox held an investor's conference here this week, outlining the company's plan to return to profitability, including new cost cutting efforts, price increases and a reduction in SKUs.

The company finished the first quarter of 2008 with a 12.7 per cent sales growth to US$128.3 million, offset by a growing operating loss of $7.9 million. A year ago, the reported operating loss was only $1.6 million. Audiovox reported also that its gross margins dropped 250 basis points to 15.6 per cent from 18.1 per cent a year ago.

"At the start of the year, we knew there would be some softness," president/CEO Pat Lavelle told the assembled investors.

Lavelle said Audiovox has already identified about $8 million in cost reductions, most of which will come from integrating overhead from recent acquisitions. However, the automotive industry problems are also creating sales headaches for Audiovox, a principal supplier of consumer electronics products for automobiles.

Audiovox also increased product prices in July to combat higher shipping and other costs, Lavelle said, and managing its inventory "to offset further risks."

The company is still predicting a loss for the first half of this fiscal year, which ended 31 August, but said the second half "will be better, despite economic conditions, resulting in higher sales and profits."

Lavelle said Audiovox is poised for growth because it enjoys more OEM automotive accounts and is in more retail outlets than ever in its history.

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