ST. LOUIS -- Viasystems Group reported first-quarter net sales at its EMS unit rose 28% to $46 million in the period ended March 31. Operating income rose 40% to $1.4 million.

Telecommunications and computer and datacom demand were lower, partially offset by industrial and instrumentation.

The firm reported first-quarter sales at its printed circuit board fabrication unit fell 2% sequentially to $192.7 million as the Chinese New Year and unplanned maintenance took their toll. The PCB unit's operating income dropped nearly in half to $9.8 million from the fourth quarter 2010. Sales were up 28% year-over-year and operating income rose $400,000, boosted by the acquisition of PCB manufacturer Merix. Viasystems said the Chinese New Year holiday period and unplanned maintenance of a plating line for several weeks during the quarter constrained production. Automotive sales rose, while telecommunications sales slowed and average selling prices dipped.

Overall net sales were $238.7 million in the quarter ended March 31, up 4.4% year-over-year organically and down 2.1% sequentially. Sales were up 28%, including Merix. Operating income was $11.2 million.

Net income rose to $3.8 million, from a loss of $11.9 million a year ago. The current quarter's income was aided by approximately $5.3 million of income tax benefits. The company noted higher materials costs, including copper, wages in China, and increased overtime pay resulting from workforce attrition.

“Our first-quarter results reflect, as we expected, a challenging cost environment and some short-term production constraints,” said chief executive David M. Sindelar. “We continue to experience solid growth in our automotive and industrial and instrumentation end-markets, while the telecommunications customer programs we serve continued the decline we began to see during the second half of 2010. In addition, inflationary pressures on materials costs and costs of Chinese labor continued to challenge our gross margin as a percentage of net sales.”

“Orders booked in each of our end-markets during our first quarter of 2011 exceeded net sales, in part because of our temporary capacity limitations,” Sindelar said. “During the second quarter, we expect to benefit from a return to normal production capacity in all of our factories, and our goal is to make progress in reducing our backlog. Late in the second quarter, we also expect to initiate production on some of our new capacity additions.”

He added that problems stemming from the earthquake in Japan could pose future problems, but none have yet emerged. “We are not ruling out the possibility of order delays due to latent supply chain issues stemming from the disasters in Japan, but we entered our second quarter with a solid order book."

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