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Martinrea International Inc. Announces Third Quarter Results and Commencement of Normal Course Issuer Bid

Date : 11/14/2012 @ 3:31AM
Source : Marketwired
Stock : Martinrea International Inc. (MRE)
Quote : 9.77  -0.1 (-1.01%) @ 2:44AM
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Martinrea International Inc. Announces Third Quarter Results and Commencement of Normal Course Issuer Bid

Martinrea (TSX:MRE)
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Martinrea International Inc. (TSX:MRE) a leader in the production and development of quality metal parts, assemblies and modules, fluid management systems and complex aluminum products focused primarily on the automotive sector announced today the release of its financial results for the third quarter ended September 30, 2012. Martinrea also announced today that it is commencing a normal course issuer bid for up to 4,149,772 common shares of the Company, representing approximately up to 5% of Martinrea's issued and outstanding common shares. Martinrea currently employs over 11,000 skilled and motivated people in 37 plants in Canada, the United States, Mexico, Brazil and Europe.

All amounts in this Press Release are in Canadian dollars, unless otherwise stated; and all tabular amounts are in thousands of Canadian dollars, except earnings per share and number of shares. Additional information about the Company, including the Company's Management Discussion and Analysis of Operating Results and Financial Position for the quarter ended September 30, 2012 dated as of November 13, 2012, the Company's unaudited interim consolidated financial statements for the quarter ended September 30, 2012 (the "unaudited consolidated interim financial statements") and the Company's Annual Information Form for the year ended December 31, 2011, can be found at www.sedar.com.

Non-IFRS Measures

The Company reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). However, the Company has included certain non-IFRS financial measures and ratios in this Press Release that the Company believes will provide useful information in measuring the financial performance and financial condition of the Company. These measures do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to the other financial measures determined in accordance with IFRS. Non-IFRS measures referred to in the analysis include "adjusted net earnings", and "adjusted earnings per share on a basic and diluted basis" and are defined in Tables A and B under "Adjustments to Net Income" of this Press Release.


REVENUE                                                                     
                                                                            
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                 Three months ended   Three months ended                    
                 September 30, 2012   September 30, 2011  Change  % Change  
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North America  $            560,060 $            440,773 119,287      27.1% 
Europe                      121,568              113,873   7,695       6.8% 
Rest of World                15,570               17,690  (2,120)    (12.0%)
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Revenue        $            697,198 $            572,336 124,862      21.8% 
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Third Quarter 2012 to Third Quarter 2011 comparison

The Company's revenues for the third quarter of 2012 increased by $124.9 million or 21.8% to $697.2 million as compared to $572.3 million for the third quarter of 2011. The total overall increase in revenue was driven mainly by a $119.3 million increase in revenue in the Company's North American operating segment. Included in the $119.3 million increase in revenue generated in North America was an increase of $8.6 million related to the operations of the Company's plant in Queretaro, Mexico, which formed part of the Honsel acquisition and for which the current quarter includes three full months of revenue as compared to only two months in the comparative third quarter of 2011 (Martinrea Honsel was acquired part way through the third quarter of 2011 on July 29, 2011). The remainder of the increase in North America can be attributed to the launch of new programs during or subsequent to the third quarter of 2011, improved production volumes in North American OEM light vehicle platforms, a $5.9 million increase in tooling revenue which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer, and the impact of foreign exchange rates on the translation of U.S. dollar denominated revenue, which had a positive impact on revenue for the third quarter of 2012 of $13.6 million in comparison to the third quarter of 2011.

Revenues for the third quarter of 2012 in the Company's Europe operating segment, comprised predominantly of the European operations of Martinrea Honsel, increased by $7.7 million or 6.8% to $121.6 million from $113.9 million during the third quarter of 2011. Due to the timing of the Honsel acquisition which closed on July 29, 2011, the third quarter of 2012 includes three full months of revenue from Martinrea Honsel as compared to only two months during the comparative third quarter of 2011. As such, despite the increase in year-over-year revenue in Europe, average monthly revenue during the quarter in fact decreased driven mainly by a year-over-year decrease in OEM light vehicle and engine production in Western Europe and the impact of foreign exchange rates on the translation of Euro denominated revenue, which had a negative impact on revenue for the third quarter of 2012 of $13.2 million as compared to the third quarter of 2011.

Revenues for the third quarter of 2012 in the Company's Rest of World operating segment, comprised predominantly of the Brazilian operations of Martinrea Honsel, decreased by $2.1 million or 12% to $15.6 million as compared to $17.7 million for the third quarter of 2011. As noted above, the third quarter of 2012 includes three full months of revenue from Martinrea Honsel as compared to only two months during the third quarter of 2011. The decrease in overall revenue and average monthly revenue during the current quarter in the Rest of World operating segment can be attributed to a decrease in OEM light and medium-heavy vehicle and engine production volumes in Brazil and the impact of foreign exchange rates on the translation of Brazilian Real denominated revenue, which had a negative impact on revenue for the third quarter of 2012 of $3.7 million as compared to the third quarter of 2011.

Overall tooling revenue increased by $8.0 million from $35.4 million for the third quarter of 2011 to $43.4 million for the third quarter of 2012, $9.2 million of which was generated by Martinrea Honsel.


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                 Three months ended   Three months ended                    
                 September 30, 2012        June 30, 2012  Change  % Change  
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North America  $            560,060 $            603,190 (43,130)     (7.2%)
Europe                      121,568              145,195 (23,627)    (16.3%)
Rest of World                15,570               14,168   1,402       9.9% 
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Revenue        $            697,198 $            762,553 (65,355)     (8.6%)
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Third Quarter 2012 to Second Quarter 2012 comparison

The Company's revenues for the third quarter of 2012 decreased by $65.4 million or 8.6% to $697.2 million as compared to $762.6 million for the second quarter of 2012. Revenues in the North American operating segment decreased by $43.1 million or 7.2% quarter-over-quarter. The decrease in North American revenues was generally due to the seasonal softness in production volumes in North American OEM light vehicle platforms and a $17.2 million decrease in tooling revenue, which is typically dependent on the timing of tooling construction and final inspection and acceptance by the customer. North American OEM light vehicle production volumes are typically lower during the third quarter of any given year due to the customer summer shutdowns common to the automotive industry. Excluding tooling revenue, revenue in the North American operating segment decreased by approximately 4.6%. However, overall North American OEM light vehicle production for the third quarter of 2012 decreased sequentially by approximately 10%. The quarter-over-quarter decrease in revenue in the Company's North American operating segment deviated favourably from the overall decline in North American OEM light vehicle production, due generally to the launch of incremental new programs, including the new Ford Escape, and the impact of foreign exchange rates on the translation of U.S. dollar denominated revenue, which had a positive impact on revenue for the third quarter of 2012 of $3.3 million in comparison to the second quarter of 2012.

Revenues for the third quarter of 2012 in the Company's Europe operating segment decreased by $23.6 million or 16.3% to $121.6 million from $145.2 million for the second quarter of 2012. The decrease in revenues in Europe was driven by a quarter-over-quarter decrease in OEM light vehicle and engine production in Western Europe, some of which relates to the customer summer shutdowns common to the automotive industry, and the impact of foreign exchange rates on the translation of Euro denominated revenue, which had a negative impact on revenue for the third quarter of 2012 of $4.7 million compared to the second quarter of 2012. Overall, OEM light vehicle and engine production in Western Europe decreased quarter-over-quarter by approximately 14% and 11%, respectively.

Revenues for the third quarter of 2012 in the Company's Rest of World operating segment increased by $1.4 million or 9.9% to $15.6 million from $14.2 million for the second quarter of 2012. The increase can be attributed to an increase in OEM light and medium-heavy vehicle production in Brazil. The increase in revenue in the Rest of World operating segment would have been higher had it not been for the translation of Brazilian Real denominated revenue which had a negative impact on the quarter of $1.1 million as compared to the second quarter of 2012.

Tooling revenue decreased by $18.9 million from $62.3 million for the second quarter of 2012 to $43.4 million for the third quarter of 2012, $9.2 million of which was generated by the acquired assets of Honsel.


GROSS MARGIN                                                                
                                                                            
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                Three months ended   Three months ended                     
                September 30, 2012   September 30, 2011   Change  % Change  
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Gross margin   $            58,883  $            62,339   (3,456)     (5.5%)
% of revenue                   8.4%                10.9%                    
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Third Quarter 2012 to Third Quarter 2011 comparison

The gross margin percentage, before adjustments, for the third quarter of 2012 of 8.4% decreased as a percentage of revenue by 2.5% from 10.9% realized during the third quarter of 2011. Excluding the impact of a major equipment failure at one of the Company's facilities in the U.S. as described in Table A under "Adjustments to Net Income", and tooling revenue, which increased year-over-year and typically earns low or no margins for the Company, Martinrea's gross margin percentage for the third quarter of 2012 would have been 9.6%, a decrease from 11.6% realized in the third quarter of 2011. The gross margin percentage for the third quarter of 2012 was positively impacted by productivity and efficiency improvements at certain North American operating facilities and improved production volumes in North American OEM light vehicle platforms. The positive impact was more than offset by a decrease in production volumes in Europe and Brazil as previously noted and increased levels of launch costs and other launch-related operational expenses. The launch activity costs incurred during the quarter relate to several new programs currently ramping up during the second half of 2012, which will generate approximately $450 million in annualized business when fully launched. The most significant of the new programs is the new Ford Escape which is launching in four Martinrea facilities in the U.S., including the Company's facilities in Shelbyville, Kentucky and Hopkinsville, Kentucky. In addition to the content on the new Ford Escape, current or upcoming launches during the second half of the year include content on the following OEM platforms: Ford CD4, GM Global Gamma, GM Alpha, GM Epsilon, Nissan L12F and Honda C-5.

The Company's Shelbyville facility, approximating one million square feet, represents approximately 20% of the Company's square footage and is in the midst of the largest single launch in the Company's history. A total of approximately $275 million in anticipated annualized business related to Ford's C520 program is in the process of ramping up at this facility, which has increased from the award of the program, as anticipated sales and production volumes have increased. The new work has greatly expanded throughput and capacity utilization at Shelbyville, and is expected to turn a very large plant with negative gross margin and earnings into a positive gross margin and earnings contributor in 2013, as launch costs subside, and as the plant reduces cycle times, improves output per hour and efficiency, and in general rationalizes its operations. While the ramp up has been unprecedented and in a compressed time frame as the customer sells vehicles and builds inventory in connection with the launch of the Ford Escape, the Shelbyville plant has satisfied customer daily production requirements since the first week of September 2012. Operations have stabilized and the Shelbyville plant is now focused on cost reduction. Further, operational improvements to certain production lines are planned over the Christmas break when there is downtime in production, with the objective of increasing throughput and lowering cost. In the meantime, the plant is running at full capacity and is incurring launch costs relating to extra people, overtime, and other costs and inefficiencies, all of which are expected to decline over time.

The Ford C520 business in Shelbyville consists of approximately $150 million in value added internally produced components (some of which are or will be manufactured by other Martinrea facilities) and $125 million in components purchased from other suppliers that will be integrated with internally produced components to produce finished welded assemblies. The gross margins on components purchased from other suppliers are typically lower than for value added work, although return on capital is higher. With the launch of the Ford C520 program in Shelbyville, approximately 25% of Martinrea's business excluding Martinrea Honsel involves integrator or assembly work.

The Company's Hopkinsville, Kentucky facility is involved in several launches simultaneously, together with existing programs, which has resulted and is resulting in significant costs, as the plant deals with the increases in production volume. As discussed in Table A under "Adjustments to Net Income", the Company experienced a major equipment failure at this facility in June and July which involved substantial one-time costs. Although the press is now operational again, some of the facility's weld assembly lines are struggling to keep up with the aggressive volume requirements of the Company's customers. The customer volume requirements and the need to upgrade and improve equipment performance simultaneously is resulting in substantial cost for overtime, extra personnel, and customer charge backs including expedited freight to meet customer deadlines. While operations are improving, not as quickly as desired but steadily, significant costs have been and are being incurred at this facility, all of which are expected to decline over time as operational improvements are made.


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                Three months ended   Three months ended                     
                September 30, 2012        June 30, 2012   Change  % Change  
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Gross margin   $            58,883  $            76,067  (17,184)    (22.6%)
% of revenue                   8.4%                10.0%                    
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Third Quarter 2012 to Second Quarter 2012 comparison

Gross margin percentage, before adjustments, for the third quarter of 2012 of 8.4% decreased as a percentage of revenue by 1.6% from 10.0% realized during the second quarter of 2012. Excluding the impact of a major equipment failure at one of the Company's facilities in the U.S. as described in Table B under "Adjustments to Net Income", and tooling revenue, which decreased significantly quarter-over quarter and typically earns no or low margins for the Company, gross margin percentage for the third quarter of 2012 decreased by 1.9% to 9.6% from 11.5% for the second quarter of 2012. The gross margin percentage for the third quarter was negatively impacted by lower absorption of overheads from the seasonal softness in production volumes in North American OEM light vehicle platforms and a decrease in OEM light vehicle and engine production volumes in Western Europe, some of which can be attributed to the customer summer shutdowns common to the automotive industry, and launch costs and other launch-related operational expenses which increased quarter-over-quarter as discussed above.

ADJUSTMENTS TO NET INCOME

(ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)

Adjusted net earnings excludes certain unusual and other items, as set out in the following tables and described in the notes thereto. Management uses adjusted earnings as a measurement of operating performance of the Company and believes that, in conjunction with IFRS measures, it provides useful information about the financial performance and condition of the Company.


TABLE A                                                                     
                                                                            
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                                      For the three  For the three          
                                       months ended   months ended          
                                      September 30,  September 30,          
                                               2012           2011          
                                      -------------- --------------         
                                                (a)            (b)  (a)-(b) 
                                                                     Change 
----------------------------------------------------------------------------
                                                                            
NET EARNINGS (A)                              7,980          6,454    1,526 
                                                                            
Add back - Unusual Items:                                                   
Employee Related Severance Costs (1)          2,899          9,974   (7,075)
Other Restructuring Costs (1)                   611              -      611 
                                                                            
Add back - Other Items:                                                     
Impact of a major equipment failure at                                      
 an operating facility in the U.S.                                          
 (recorded as COS) (3)                        3,950              -    3,950 
Transaction costs associated with the                                       
 Honsel acquisition (recorded as SG&A)                                      
 (4)                                              -          6,728   (6,728)
                                                                            
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TOTAL UNUSUAL AND OTHER ITEMS BEFORE                                        
 TAX                                          7,460         16,702   (9,242)
Tax impact of above items                      (820)           (51)    (769)
Non-controlling interest on above                                           
 items                                         (837)        (6,780)   5,943 
                                                                            
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TOTAL UNUSUAL AND OTHER ITEMS AFTER                                         
 TAX (B)                                      5,803          9,871   (4,068)
                                                                            
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ADJUSTED NET EARNINGS (A + B)                13,783         16,325   (2,542)
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Number of Shares Outstanding - Basic                                        
 ('000)                                      82,991         83,179          
Adjusted Basic Earnings Per Share              0.17           0.20          
Number of Shares Outstanding - Diluted                                      
 ('000)                                      83,431         83,708          
Adjusted Diluted Earnings Per Share            0.17           0.20          
                                                                            
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TABLE B                                                                     
                                                                            
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                                      For the three  For the three          
                                       months ended   months ended          
                                      September 30,                         
                                               2012  June 30, 2012    (a-b) 
                                      -------------- ---------------        
                                                (a)            (b)   Change 
----------------------------------------------------------------------------
                                                                            
NET EARNINGS (A)                              7,980         14,372   (6,392)
                                                                            
Add back - Unusual Items:                                                   
Employee Related severance Costs (1)          2,899          1,054    1,845 
Other Restructuring Costs (1)                   611          1,413     (802)
                                                                            
Add back - Other Items:                                                     
Executive separation agreement                                              
 (recorded as SG&A) (2)                           -          5,177   (5,177)
Impact of a major equipment failure at                                      
 an operating facility in the U.S.                                          
 (recorded as COS) (3)                        3,950          4,503     (553)
                                                                            
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TOTAL UNUSUAL AND OTHER ITEMS BEFORE                                        
 TAX                                          7,460         12,147   (4,687)
Tax impact of above items                      (820)        (2,367)   1,547 
Non-controlling interest in above                                           
 items                                         (837)          (102)    (735)
                                                                            
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TOTAL UNUSUAL AND OTHER ITEMS AFTER                                         
 TAX (B)                                      5,803          9,678   (3,875)
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ADJUSTED NET EARNINGS (A + B)                13,783         24,050  (10,267)
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Number of Shares Outstanding - Basic                                        
 ('000)                                      82,991         82,975          
Adjusted Basic Earnings Per Share              0.17           0.29          
Number of Shares Outstanding - Diluted                                      
 ('000)                                      83,431         83,715          
Adjusted Diluted Earnings Per Share            0.17           0.29          
                                                                            
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(1) Employee related severance and other restructuring costs

As part of the acquisition of Honsel, a certain level of restructuring was planned, in particular, at the Company's German facility in Meschede. The restructuring efforts commenced immediately after the closing of the acquisition on July 29, 2011 and, as a result, $11.4 million of employee related severance was recognized during the year ended December 31, 2011, of which $10.0 million was incurred during the third quarter of 2011. An additional $2.5 million of employee related severance has been recognized during the nine months ended September 30, 2012, of which $1.7 million was incurred during the third quarter of 2012 and $0.2 million during the second quarter of 2012. The majority of the restructuring costs expected to be incurred will be in the nature of employee related severance as the Company rationalizes the overhead cost structure and improves the efficiency of the operations. The Company anticipates that additional employee related severance will be incurred during the remainder of 2012.

In addition, during the fourth quarter of 2011, the Company began the process of closing one of its small operating facilities in Mexico. The existing business and equipment of this facility is being moved to other Company facilities in Mexico including a new facility the Company opened in Silao, Mexico in 2011. Restructuring costs relating to this closure during the fourth quarter of 2011 totaled $2.4 million consisting primarily of employee related severance ($1.5 million) and the dismantling and transporting of PP&E between Company facilities ($0.9 million). An additional $3.5 million of primarily other restructuring costs has been recognized during the nine months ended September 30, 2012, of which $0.6 million was incurred during the third quarter of 2012 and $1.4 million during the second quarter of 2012, related to the dismantling and transporting of PP&E between Company facilities. The closure of this facility will be complete by the end of 2012.

Costs associated with other restructuring activities totaled $1.2 million for the third quarter of 2012 and $0.9 million for the second quarter of 2012 for employee related severance relating to the right sizing of certain other manufacturing facilities.

At this time, the Company does not expect to incur any further significant restructuring costs with the exception of the settlement of the Windsor pension and OPEB plans which the Company will continue to fund over the next twelve months, the windup of the Martinrea Fabco Hot Stampings pension plan, the completion of the closure of the small operating facility in Mexico as noted above and any restructuring required relating to the acquired assets of Honsel (as discussed above).

(2) Executive separation agreement

On June 29, 2012, the Company announced that Nat Rea stepped down as Vice Chairman and Director of Martinrea, effective immediately, to pursue other opportunities. As part of the separation agreement and based on the terms of his employment contract, the Company paid Mr. Rea $5.2 million which was expensed during the second quarter of 2012 and included in SG&A expense. The Company does not expect to incur any further costs associated with Mr. Rea's departure.

(3) Impact of a major equipment failure at an operating facility in the U.S.

During the month of June, 2012, a press in one of the Company's operating facilities in the U.S. experienced a significant failure and was not operational for approximately 23 days. As a consequence and due to the lack of press capacity at the facility, approximately thirty dies were outsourced to external stamping companies which resulted in the following incremental costs:


--  external stamping fees; 
--  transportation costs to move the dies to the external stamping companies
    and stamped parts back to the Martinrea operating facility for assembly;
--  additional manpower to ensure the quality of parts stamped by external
    suppliers; 
--  sorting and rework costs; and 
--  dedicated external contractor support to get the press operational
    again. 

These incremental costs, which totaled $4.5 million for the second quarter of 2012 and $3.95 million for the third quarter of 2012, are non-recurring in nature and had a significant impact on the performance of the facility during the months of June and July, 2012 and part of August. The press is now operational again and, as a result, no further costs related to this matter are being incurred.

(4) Transaction costs associated with the acquisition of Honsel

On July 29, 2011, the Company closed the purchase of the assets of Honsel to form the Martinrea Honsel Group. Martinrea joined with Anchorage in the transaction and, consequently, owns 55% of the Martinrea Honsel Group with Anchorage owning the remaining 45%. The Company expensed $6.7 million in transaction and integration costs related to the acquisition during the third quarter of 2011. The Company does not expect to incur any further significant transaction and integration costs related to the acquired assets of Martinrea Honsel.


NET EARNINGS                                                                
(ATTIBUTABLE TO EQUITY HOLDERS OF THE COMPANY)                              
                                                                            
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                  Three months ended   Three months ended                %  
                  September 30, 2012   September 30, 2011  Change   Change  
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Net Earnings    $              7,980 $              6,454   1,526     23.6% 
Adjusted net                                                                
 earnings       $             13,783 $             16,325  (2,542)   (15.6%)
Earnings per                                                                
 common share                                                               
 Basic          $               0.10 $               0.08                   
 Diluted        $               0.10 $               0.08                   
Adjusted                                                                    
 earnings per                                                               
 common share                                                               
 Basic          $               0.17 $               0.20                   
 Diluted        $               0.17 $               0.20                   
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Third Quarter 2012 to Third Quarter 2011 comparison

Net earnings, before adjustments, for the third quarter of 2012 of $8.0 million increased by $1.5 million from $6.5 million for the third quarter of 2011. Excluding unusual and other items incurred during these two quarters as explained in Table A under "Adjustments to Net Income", the net earnings for the third quarter of 2012 decreased to $13.8 million or $0.17 per share, on a basic and diluted basis, in comparison to adjusted net earnings of $16.3 million or $0.20 per share, on a basic and diluted basis, for the third quarter of 2011.

The adjusted net earnings for the third quarter of 2012, as compared to the third quarter of 2011, was positively impacted by an increase in OEM light vehicle production volumes in North America, the launch of new programs during or subsequent to the third quarter of 2011 and productivity and efficiency improvements at certain North American facilities. The positive impact was more than offset by an increase in launch costs and other launch-related operational expenses during the quarter, as previously discussed, an increase in year-over-year interest expense on higher debt levels and a decrease in the contribution of Martinrea Honsel to the net earnings attributable to the equity holders of the Company from $0.06 per share in the third quarter of 2011 to $0.02 per share in the third quarter of 2012, due mainly to the year-over-year decrease in OEM light and medium-heavy vehicle and engine production volumes in Western Europe and Brazil.


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                  Three months ended   Three months ended                %  
                  September 30, 2012        June 30, 2012  Change   Change  
----------------------------------------------------------------------------
Net Earnings    $              7,980 $             14,372  (6,392)   (44.5%)
Adjusted net                                                                
 earnings       $             13,783 $             24,050 (10,267)   (42.7%)
Earnings per                                                                
 common share                                                               
 Basic          $               0.10 $               0.17                   
 Diluted        $               0.10 $               0.17                   
Adjusted                                                                    
 earnings per                                                               
 common share                                                               
 Basic          $               0.17 $               0.29                   
 Diluted        $               0.17 $               0.29                   
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Third Quarter 2012 to Second Quarter 2012 comparison

Net earnings, before adjustments, for the third quarter of 2012 of $8.0 million decreased by $6.4 million from net earnings of $14.4 million for the second quarter of 2012. Excluding unusual and other items incurred during these two quarters, as explained in Table B under "Adjustments to Net Income", net earnings for the third quarter of 2012 decreased to $13.8 million or $0.17 per share, on a basic and diluted basis, as compared to net earnings of $24.1 million or $0.29 per share, on a basic and diluted basis, for the second quarter of 2012. The decrease can be attributed to the seasonal softness in OEM light vehicle production volumes in North America, a quarter-over-quarter increase in launch costs and other launch-related operational expenses as previously discussed and a decrease in the contribution of Martinrea Honsel to the net earnings attributable to the equity holders of the Company from $0.05 per share in the second quarter of 2012 to $0.02 per share in the third quarter of 2012 on lower OEM light and medium-heavy vehicle and engine production volumes in Western Europe.


CAPITAL EXPENDITURES                                                        
                                                                            
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                 Three months ended   Three months ended                    
                 September 30, 2012   September 30, 2011   Change  % Change 
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Capital                                                                     
 Expenditures  $             54,504 $             47,889    6,615      13.8%
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Third Quarter 2012 to Third Quarter 2011 comparison

Capital expenditures increased by $6.6 million to $54.5 million in the third quarter of 2012 from $47.9 million in the third quarter of 2011. This increase is primarily attributed to an increase in the purchase of new program equipment related to newly awarded business currently ramping up and scheduled to launch over the next 12 to 24 months.


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                 Three months ended   Three months ended                    
                 September 30, 2012        June 30, 2012   Change  % Change 
----------------------------------------------------------------------------
Capital                                                                     
 Expenditures  $             54,504 $             53,065    1,439       2.7%
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Third Quarter 2012 to Second Quarter 2012 comparison

Capital expenditures during the third quarter of 2012 remained relatively consistent with the previous quarter increasing by $1.4 million to $54.5 million in the third quarter of 2012 from $53.1 million in the second quarter of 2012. Capital expenditures incurred in both the second and third quarters of 2012 relate to new program equipment for newly awarded business currently ramping up and scheduled to launch over the next 12 to 24 months.

NORMAL COURSE ISSUER BID

Martinrea announced today that it is commencing a normal course issuer bid for up to 4,149,772 common shares of the Company, representing approximately up to 5% of Martinrea's issued and outstanding common shares.

Martinrea believes that repurchasing its shares may be a good use of funds, as it reduces dilution from stock issuances, distributes cash to shareholders and reflects its view that current share prices do not adequately reflect their value in relation to its business prospects.

The Company's normal course issuer bid shall commence on or about November 19, 2012 and terminate on November 18, 2013, unless earlier terminated by the Company. Common shares purchased under the normal course issuer bid will be cancelled. The price that Martinrea will pay for any such common shares will be the market price at the time of acquisition.

Management of Martinrea will determine the actual number of common shares that may be purchased and the timing of any such purchases, subject to compliance with TSX rules. Pursuant to TSX rules, the maximum number of common shares that may be purchased on a daily basis, subject to certain prescribed exceptions, shall be 107,863 common shares. This maximum represents 25% of the average daily trading volume of the common shares on the TSX over the period between May 1, 2012 and October 31, 2012, being 431,453 common shares.

Martinrea has 82,995,450 common shares issued outstanding as of November 13, 2012. The bid has been approved by the TSX, and shall be effected through the facilities of the TSX.

In the preceding twelve-month period, the Company repurchased 338,900 common shares for a total consideration of approximately $2.39 million (or a volume weighted average price of $7.0547 per share).

Paradigm Capital Inc. will conduct the bid on behalf of the Company.

Nick Orlando, Martinrea's President and Chief Executive Officer, stated: "Our third quarter results reflected record Q3 revenues, solid earnings after adjustments, and extensive launch and pre-launch activity as we continued to ramp up the largest backlog in our history. The Company's operations are running well in many plants and meeting or exceeding expectations. However, launch costs and other operational costs in several plants negatively impacted results in the quarter. At this stage, while only half way through the fourth quarter, the Company anticipates that adjusted earnings will continue to be affected by such costs. The Company anticipates launch and operating costs for the fourth quarter to be similar to those of the third quarter, however, such costs may exceed those in the third quarter depending on when operations at facilities launching new programs are normalized and launch and other costs decline. As the Company is in the midst of its greatest launch load in its history, many of the Company's plants are currently involved in launch activity and are incurring launch costs. Most launch activity is progressing well and is anticipated to be substantially completed by year end. I can say that we are seeing continuing improvement in the facilities where we are launching product."

Mr. Orlando continued: "Martinrea's Shelbyville, Kentucky plant is in the midst of the largest single launch in the Company's history. While the ramp up has been unprecedented and in a compressed time frame as the customer sells vehicles and builds inventory in connection with the launch of the Ford Escape, the Shelbyville plant has satisfied customer daily production requirements since the first week of September, 2012. Operations have stabilized, we have inventory banks on hand and the Shelbyville plant is now focused on cost reduction. Further, operational improvements to certain productions lines are planned over the Christmas break when there is downtime in production, with the objective of increasing throughput and lowering costs. In the meantime, the plant is running at full capacity and is incurring launch costs relating to extra people, overtime, and other costs and inefficiencies, all of which are expected to continue to decline over time as the Company reduces cycle times, improves output per hour, improves efficiencies and in general rationalizes its operations. Our Hopkinsville, Kentucky facility is involved in several launches simultaneously, together with existing programs, which has resulted and is resulting in significant costs, as the plant deals with the increases in volume. As we have noted, the Company experienced a major equipment failure at this facility in June and July which involved substantial one-time costs. Although the press is now operational again, some of the facility's weld assembly lines have struggled to keep up with the aggressive volume requirements of the Company's customers. The customer volume requirements and the need to upgrade and improve equipment performance simultaneously is resulting in substantial costs for overtime, extra personnel, and customer charge backs including expedited freight to meet customer deadlines. In November 2012, the Hopkinsville facility has reached a key milestone of satisfying customer production requirements with minimal expedited freight. Hopkinsville is now entering the cost control stage of its launches. We continue to reduce non-value add costs and identify opportunities to enhance productivity and profitability in the coming months."

Mr. Orlando added: "Although we are very focused on launches this year, we continue to look for and quote appropriate new business, and have added the following new business since our last announcement: $50 million in hot stamping and assembly work for the new Chrysler 200 scheduled to launch in 2014 and $15 million in other metal forming work on the new GM small pick-up truck scheduled to launch in 2015."

Fred Di Tosto, Martinrea's Chief Financial Officer, stated: "Revenues for the third quarter, excluding $43.4 million in tooling revenues, were approximately $654 million which was just short of the low end of our quarterly sales guidance as previously provided due mainly to softness in revenues in Europe. In the third quarter of 2012 our adjusted earnings per share on a basic and diluted basis was $0.17, after factoring out restructuring costs and the cost of a major equipment failure in Hopkinsville, Kentucky as previously announced, within our quarterly earnings guidance as previously reported. Our third quarter results from the Martinrea Honsel assets were accretive to earnings, after factoring out unusual and other items, and amounted to approximately $0.02 of earnings per share for the quarter, lower than our previous two quarters due mainly to softness in Brazil and Europe. Our third quarter from Martinrea Classic amounted to approximately $0.15 of earnings per share, after factoring out unusual and other items. As noted, we did experience some launch activity costs and operational costs which negatively impacted earnings in the quarter. These costs are expected to subside at some point, but will impact the fourth quarter of 2012, as we continue to work through the ramp up of the largest backlog in our history. In addition, we saw gross margin for the quarter, excluding tooling revenue and unusual and other items, at 9.6%, a decrease over the previous quarter due mainly to the lower absorption of overhead from the third quarter softness in production volumes in both North America and Europe, and launch activity we have described. Aside from the short term volatility in our gross margin as a result of the extensive launch activity, we expect gross margin to continue to improve over time and approach historical levels as we launch a significant backlog of business over the next 24 months and as, if and when production volumes continue to improve in North America."

Rob Wildeboer, Martinrea's Executive Chairman, stated: "Overall, we have had a good year so far, with record revenues and adjusted earnings per share of $0.76 year to date. We anticipate that the Martinrea Honsel numbers will continue in the fourth quarter to be soft, as Europe and Brazil experience softness in production and revenues. In our fourth quarter of 2012, we anticipate revenues (excluding tooling revenues) will range from $650 to $680 million, and we believe our earnings per share after adjustments will range from $0.14 to $0.19 cents per share. The Company continues to estimate that 2012 revenues and adjusted net income overall will be higher than in any previous year in the Company's history. The Company continues to anticipate that 2013 revenues and adjusted earnings per share will be at record levels absent unanticipated events."

Mr. Wildeboer continued: "Our top priority continues to be the improvement of our operations at facilities launching new programs. In terms of our launches and launch costs, these are substantial investments to support business awards that will generate future sales and earnings in most cases and for many years to come. Our launch costs have been more substantial than we anticipated a year ago, as our launch schedule has been compressed mainly into the second half of the year and as ramp ups have been heavier than anticipated, in part because of the fact that the North American automotive market is so robust right now and we happen to be involved in some very popular platforms. While 2012 is our year of the launch, unfortunately it is also the year of launch costs for us. This has lowered our earnings compared to budget. As for operational improvements, we will make them as we always have, but they are costly right now and they take time. We have a great team here at Martinrea, we are proud of how they have performed for us and for our customers and we have a very bright future together."

A conference call to discuss the third quarter results will be held on Wednesday, November 14, 2012 at 8:00 a.m. (Toronto time) which can be accessed by dialing 416-340-8410 or toll free 866-225-2055. Please call 10 minutes prior to the start of the conference call.

If you have any teleconferencing questions, please call Andre La Rosa at 416-749-0314.

There will also be a rebroadcast of the call available by dialing 905-694-9451 or toll free 800-408-3053 (conference id - 4555837#). The rebroadcast will be available until Wednesday, November 28, 2012.

Forward-Looking Information

Special Note Regarding Forward-Looking Statements

This Press Release and the documents incorporated by reference therein contains forward-looking statements within the meaning of applicable Canadian securities laws including related to the Company's expectations as to future profitability, revenues, outlooks and earnings, statements as to the growth of the Company and pursuit of its strategies, the launching of new programs at the Shelbyville and Hopkinsville and other plants, including expectations as to the financial impact of the launches, statements on operational improvement and other launch costs, and the continuation of monitoring, managing of launch costs and operational expenses, the nature and duration of the economic recession to the continuation of monitoring, managing and rationalization of expenses (including of Martinrea Honsel), the Company's expectations regarding the future amount and type of restructuring expenses to be expensed (including Martinrea Honsel) and the windup of the Hot Stampings pension plan, the Company's characterization of the automotive market and its views on the long term outlook of the automotive industry, including the European automotive market, and corresponding increased sales and production, the Company's ability to capitalize on opportunities in the automotive industry as well as other forward-looking statements. The words "continue", "expect", "anticipate", "estimate", "may", "will", "should", "views", "intend", "believe", "plan" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments including anticipated launch costs and timing of launches, as well as other factors that the Company believes are appropriate in the circumstances. Many factors could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the following factors, some of which are discussed in detail in the Company's Annual Information Form and other public filings which can be found at www.sedar.com:


--  North American and global economic and political conditions; 
--  the highly cyclical nature of the automotive industry and the industry's
    dependence on consumer spending and general economic conditions; 
--  the Company's dependence on a limited number of significant customers; 
--  financial viability of suppliers; 
--  Martinrea's reliance on critical suppliers and on suppliers for
    components and the risk that suppliers will not be able to supply
    components on a timely basis or in sufficient quantities; 
--  competition; 
--  the increasing pressure on the Company to absorb costs related to
    product design and development, engineering, program management,
    prototypes, validation and tooling; 
--  increased pricing of raw materials; 
--  outsourcing and in-sourcing trends; 
--  competition with low cost countries; 
--  the risk of increased costs associated with product warranty and recalls
    together with the associated liability; 
--  the Company's ability to enhance operations and manufacturing
    techniques; 
--  dependence on key personnel; 
--  limited financial resources; 
--  risks associated with the integration of acquisitions; 
--  costs associated with rationalization of production facilities; 
--  the potential volatility of the Company's share price; 
--  changes in governmental regulations or laws including any changes to the
    North American Free Trade Agreement; 
--  labour disputes; 
--  litigation; 
--  currency risk; 
--  fluctuations in operating results; 
--  internal controls over financial reporting and disclosure controls and
    procedures; 
--  environmental regulation; 
--  a shift away from technologies in which the Company is investing; 
--  potential tax exposures; 
--  a change in the Company's mix of earnings between jurisdictions with
    lower tax rates and those with higher tax rates, as well as the
    Company's ability to fully benefit from tax losses; 
--  the Company's ability to shift its manufacturing footprint to take
    advantage of opportunities in growing markets; 
--  risks of conducting business in foreign countries, including China,
    Brazil and other growing markets; 
--  under-funding of pension plans; and 
--  the cost of post-employment benefits. 

These factors should be considered carefully, and readers should not place undue reliance on the Company's forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The common shares of Martinrea trade on The Toronto Stock Exchange under the symbol "MRE".


                                                                            
Martinrea International Inc.                                                
Condensed Consolidated Balance Sheets                                       
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                     September     December 
                                               Note   30, 2012     31, 2011 
----------------------------------------------------------------------------
ASSETS                                                                      
Cash and cash equivalents                           $   31,264   $   26,505 
Trade and other receivables                      3     481,539      386,776 
Inventories                                      4     282,184      248,588 
Prepaid expenses and deposits                            8,631        8,224 
Income taxes recoverable                                10,395       11,056 
Current portion of promissory note                       2,349        2,263 
----------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                   816,362      683,412 
----------------------------------------------------------------------------
Property, plant and equipment                    5     685,031      616,592 
Deferred income tax assets                              85,392       72,715 
Intangible assets                                6      51,862       42,397 
Promissory note                                          2,469        2,378 
----------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS                               824,754      734,082 
----------------------------------------------------------------------------
TOTAL ASSETS                                        $1,641,116   $1,417,494 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
LIABILITIES                                                                 
Bank Indebtedness                                   $   16,632   $        - 
Trade and other payables                         7     512,176      427,072 
Provisions                                       8       7,332       12,956 
Income taxes payable                                     8,471        3,724 
Current portion of long-term debt                9      20,521       17,928 
----------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                              565,132      461,680 
----------------------------------------------------------------------------
Long-term debt                                   9     325,850      245,317 
Pension and other post-retirement benefits              57,329       53,795 
Deferred income tax liabilities                         53,489       40,119 
Provisions                                       8       1,818        3,149 
Other financial liability                        2      79,660       71,236 
----------------------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES                          518,146      413,616 
----------------------------------------------------------------------------
TOTAL LIABILITIES                                    1,083,278      875,296 
----------------------------------------------------------------------------
                                                                            
EQUITY                                                                      
Share capital                                   11     675,606      674,568 
Notes receivable for share capital              11           -         (602)
Contributed surplus                             11      46,340       44,165 
Other equity                                     2     (79,660)     (71,236)
Accumulated other comprehensive loss                   (33,985)      (8,330)
Accumulated deficit                                   (129,682)    (169,006)
----------------------------------------------------------------------------
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF                              
 THE COMPANY                                           478,619      469,559 
Non-controlling interest                                79,219       72,639 
----------------------------------------------------------------------------
TOTAL EQUITY                                           557,838      542,198 
----------------------------------------------------------------------------
TOTAL LIABILITIES AND EQUITY                        $1,641,116   $1,417,494 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                        
See accompanying notes to the interim condensed consolidated financial  
statements.                                                             
                                                                        
On behalf of the Board:                                                 
                                                                        
"Robert Wildeboer"      Director                                        
--------------------------------                                        
                                                                        
"Suleiman Rashid"       Director                                        
--------------------------------                                        
                                                                            
                                                                            
Martinrea International Inc.                                                
Condensed Consolidated Statements of Operations                             
(in thousands of Canadian dollars, except per share amounts) (unaudited)    
                                                                            
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Three      Three                         
                                  months     months Nine months Nine months 
                                   ended      ended       ended       ended 
                               September  September   September   September 
                         Note   30, 2012   30, 2011    30, 2012    30, 2011 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
SALES                         $  697,198 $  572,336 $ 2,195,405 $ 1,478,104 
----------------------------------------------------------------------------
                                                                            
Cost of sales (excluding                                                    
 depreciation of                                                            
 property, plant and                                                        
 equipment)                     (622,159)  (495,514) (1,933,023) (1,288,240)
Depreciation of property,                                                   
 plant and equipment                                                        
 (production)                    (16,156)   (14,483)    (47,123)    (35,093)
----------------------------------------------------------------------------
Total cost of sales             (638,315)  (509,997) (1,980,146) (1,323,333)
----------------------------------------------------------------------------
GROSS MARGIN                      58,883     62,339     215,259     154,771 
----------------------------------------------------------------------------
                                                                            
Research and development                                                    
 costs                            (3,056)    (2,732)    (10,191)     (7,022)
Selling, general and                                                        
 administrative                  (33,940)   (36,117)   (108,131)    (77,182)
Depreciation of property,                                                   
 plant and equipment                                                        
 (non-production)                 (1,511)    (1,008)     (3,929)     (2,522)
Amortization of customer                                                    
 contracts and                                                              
 relationships                    (1,431)    (2,018)     (4,558)     (4,178)
Restructuring and                                                           
 integration costs        13      (3,510)    (9,974)     (8,141)     (9,974)
Gain on disposal of                                                         
 property, plant and                                                        
 equipment                           994         71       1,065          67 
----------------------------------------------------------------------------
OPERATING INCOME                  16,429     10,561      81,374      53,960 
----------------------------------------------------------------------------
                                                                            
Finance costs                     (4,507)    (2,961)    (12,526)     (5,899)
Other finance income and                                                    
 expenses                            (44)       445         479       1,139 
----------------------------------------------------------------------------
INCOME BEFORE INCOME                                                        
 TAXES                            11,878      8,045      69,327      49,200 
                                                                            
Income tax expense        10      (2,861)    (3,807)    (17,009)    (15,538)
----------------------------------------------------------------------------
NET INCOME FOR THE PERIOD          9,017      4,238      52,318      33,662 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Non-controlling interest          (1,037)     2,216      (6,911)      2,359 
----------------------------------------------------------------------------
NET INCOME ATTRIBUTABLE                                                     
 TO EQUITY HOLDERS OF THE                                                   
 COMPANY                      $    7,980 $    6,454 $    45,407 $    36,021 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic earnings per share  12  $     0.10 $     0.08 $      0.55 $      0.43 
Diluted earnings per                                                        
 share                    12  $     0.10 $     0.08 $      0.54 $      0.43 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                            
Martinrea International Inc.                                                
Condensed Consolidated Statements of Comprehensive Income (Loss)            
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                     Three      Three       Nine       Nine 
                                    months     months     months     months 
                                     ended      ended      ended      ended 
                                 September  September  September  September 
                                  30, 2012   30, 2011   30, 2012   30, 2011 
----------------------------------------------------------------------------
                                                                            
NET INCOME FOR THE PERIOD         $  9,017   $  4,238   $ 52,318   $ 33,662 
Other comprehensive income                                                  
 (loss), net of tax:                                                        
  Foreign currency translation                                              
   differences for foreign                                                  
   operations                      (23,058)    38,994    (25,986)    27,420 
  Defined benefit plan actuarial                                            
   losses                           (1,077)    (3,720)    (6,083)    (3,892)
----------------------------------------------------------------------------
Other comprehensive income                                                  
 (loss), net of tax                (24,135)    35,274    (32,069)    23,528 
----------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME                                                  
 (LOSS) FOR THE PERIOD             (15,118)    39,512     20,249     57,190 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Attributable to:                                                            
  Equity holders of the Company    (14,951)    39,515     13,669     57,442 
  Non-controlling interest            (167)        (3)     6,580       (252)
----------------------------------------------------------------------------
TOTAL COMPREHENSIVE INCOME                                                  
 (LOSS) FOR THE PERIOD            $(15,118)  $ 39,512   $ 20,249   $ 57,190 
----------------------------------------------------------------------------
----------------------------------------------------------------------------


                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                            
                                                                            
Martinrea International Inc.                                                
Condensed Consolidated Statements of Changes in Equity                      
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                       Equity attributable to equity holders of the Company 
                      ------------------------------------------------------
                                                                            
                                    Notes                                   
                               receivable                       Cumulative  
                         Share  for share Contributed    Other translation  
                       capital    capital     surplus   equity     account  
----------------------------------------------------------------------------
Balance at December                                                         
 31, 2010             $682,495    $(2,700)    $41,241 $      -    $(18,822) 
----------------------------------------------------------------------------
Net income for the                                                          
 period                      -          -           -        -           -  
Compensation expense                                                        
 related to stock                                                           
 options                     -          -       1,967        -           -  
Contribution from non-                                                      
 controlling interest                                                       
 - Honsel acquisition        -          -           -        -           -  
Acquired non-                                                               
 controlling interest                                                       
 - Honsel acquisition        -          -           -        -           -  
Repayment of notes                                                          
 receivable                  -      1,925           -        -           -  
Exercise of employee                                                        
 stock options             499          -         (40)       -           -  
Repurchase of common                                                        
 shares                 (5,632)         -           -        -           -  
Other comprehensive                                                         
 income,                                                                    
net of tax                                                                  
  Actuarial losses           -          -           -        -           -  
  Foreign currency                                                          
   translation                                                              
   differences               -          -           -        -      25,313  
----------------------------------------------------------------------------
Balance at September                                                        
 30, 2011              677,362       (775)     43,168        -       6,491  
----------------------------------------------------------------------------
                                                                            
Net income for the                                                          
 period                      -          -           -        -           -  
Compensation expense                                                        
 related to stock                                                           
 options                     -          -         997        -           -  
Fair value of put                                                           
 option granted to                                                          
 non-controlling                                                            
 interest                    -          -           -  (71,236)          -  
Repayment of notes                                                          
 receivable                  -        173                                -  
Repurchase of common                                                        
 shares                 (2,794)         -           -        -           -  
Other comprehensive                                                         
 income,                                                                    
net of tax                                                                  
  Actuarial losses           -          -           -        -           -  
  Foreign currency                                                          
   translation                                                              
   differences               -          -           -        -     (14,821) 
----------------------------------------------------------------------------
Balance at December                                                         
 31, 2011              674,568       (602)     44,165  (71,236)     (8,330) 
----------------------------------------------------------------------------
                                                                            
Net income for the                                                          
 period                      -          -           -        -           -  
Compensation expense                                                        
 related to stock                                                           
 options                     -          -       2,450        -           -  
Fair value adjustment                                                       
 of put option granted                                                      
 to non-controlling                                                         
 interest                    -          -           -   (8,424)          -  
Repayment of notes                                                          
 receivable                  -        602           -        -           -  
Exercise of employee                                                        
 stock options           1,038          -        (275)       -           -  
Other comprehensive                                                         
 income,                                                                    
net of tax                                                                  
  Actuarial losses           -          -           -        -           -  
  Foreign currency                                                          
   translation                                                              
   differences               -          -           -        -     (25,655) 
----------------------------------------------------------------------------
Balance at September                                                        
 30, 2012             $675,606    $     -     $46,340 $(79,660)    (33,985) 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

------------------------------------------------------------------------
------------------------------------------------------------------------
                       Equity attributable to                           
                        equity holders of the                           
                               Company                                  
                      ------------------------                          
                                                                        
                                                                        
                                                      Non-              
                         Accumulated           controlling        Total 
                             deficit     Total    interest       equity 
------------------------------------------------------------------------
Balance at December                                                     
 31, 2010                  $(214,028) $488,186     $   922     $489,108 
------------------------------------------------------------------------
Net income for the                                                      
 period                       36,021    36,021      (2,359)      33,662 
Compensation expense                                                    
 related to stock                                                       
 options                           -     1,967           -        1,967 
Contribution from non-                                                  
 controlling interest                                                   
 - Honsel acquisition              -         -      67,924       67,924 
Acquired non-                                                           
 controlling interest                                                   
 - Honsel acquisition              -         -       5,415        5,415 
Repayment of notes                                                      
 receivable                        -     1,925           -        1,925 
Exercise of employee                                                    
 stock options                     -       459           -          459 
Repurchase of common                                                    
 shares                          730    (4,902)          -       (4,902)
Other comprehensive                                                     
 income,                                                                
net of tax                                                              
  Actuarial losses            (3,892)   (3,892)          -       (3,892)
  Foreign currency                                                      
   translation                                                          
   differences                     -    25,313       2,107       27,420 
------------------------------------------------------------------------
Balance at September                                                    
 30, 2011                   (181,169)  545,077      74,009      619,086 
------------------------------------------------------------------------
                                                                        
Net income for the                                                      
 period                       18,509    18,509       4,079       22,588 
Compensation expense                                                    
 related to stock                                                       
 options                           -       997           -          997 
Fair value of put                                                       
 option granted to                                                      
 non-controlling                                                        
 interest                          -   (71,236)          -      (71,236)
Repayment of notes                                                      
 receivable                        -       173           -          173 
Repurchase of common                                                    
 shares                          366    (2,428)          -       (2,428)
Other comprehensive                                                     
 income,                                                                
net of tax                                                              
  Actuarial losses            (6,712)   (6,712)          -       (6,712)
  Foreign currency                                                      
   translation                                                          
   differences                     -   (14,821)     (5,449)     (20,270)
------------------------------------------------------------------------
Balance at December                                                     
 31, 2011                   (169,006)  469,559      72,639      542,198 
------------------------------------------------------------------------
                                                                        
Net income for the                                                      
 period                       45,407    45,407       6,911       52,318 
Compensation expense                                                    
 related to stock                                                       
 options                           -     2,450           -        2,450 
Fair value adjustment                                                   
 of put option granted                                                  
 to non-controlling                                                     
 interest                          -    (8,424)          -       (8,424)
Repayment of notes                                                      
 receivable                        -       602           -          602 
Exercise of employee                                                    
 stock options                     -       763           -          763 
Other comprehensive                                                     
 income,                                                                
net of tax                                                              
  Actuarial losses            (6,083)   (6,083)          -       (6,083)
  Foreign currency                                                      
   translation                                                          
   differences                     -   (25,655)       (331)     (25,986)
------------------------------------------------------------------------
Balance at September                                                    
 30, 2012                  $(129,682) $478,619     $79,219     $557,838 
------------------------------------------------------------------------
------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements.                                                                 
                                                                            
                                                                            
Martinrea International Inc.                                                
Condensed Consolidated Statements of Cash Flows                             
(in thousands of Canadian dollars) (unaudited)                              
                                                                            
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                   Three       Three        Nine       Nine 
                                  months      months      months     months 
                                   ended       ended       ended      ended 
                               September   September   September  September 
                                30, 2012    30, 2011    30, 2012   30, 2011 
----------------------------------------------------------------------------
CASH PROVIDED BY (USED IN):                                                 
OPERATING ACTIVITIES:                                                       
Net Income for the period       $  9,017   $   4,238   $  52,318     33,662 
Adjustments for:                                                            
  Depreciation of property,                                                 
   plant and equipment            17,667      15,491      51,052     37,615 
  Amortization of customer                                                  
   contracts and                                                            
   relationships                   1,431       2,018       4,558      4,178 
  Amortization of development                                               
   costs                             494         179       1,328        199 
  Accretion of interest on                                                  
   promissory note                   (60)       (136)       (177)      (405)
  Unrealized losses / (gains)                                               
   on foreign exchange                                                      
   forward contracts                 (11)      1,963          78      1,471 
  Finance costs                    4,507       2,961      12,526      5,899 
  Income tax expense               2,861       3,807      17,009     15,538 
  Gain on disposal of                                                       
   property, plant and                                                      
   equipment                        (994)        (71)     (1,065)       (67)
  Stock-based compensation           679         827       2,450      1,967 
  Pension and other post-                                                   
   retirement benefits                                                      
   expense                           793         684       2,290      1,480 
  Contributions made to                                                     
   pension and other post-                                                  
   retirement benefits            (3,200)     (3,068)     (6,814)    (8,631)
----------------------------------------------------------------------------
                                  33,184      28,893     135,553     92,906 
Changes in non-cash working                                                 
 capital items:                                                             
  Trade and other receivables     26,480     (52,919)   (106,442)  (132,821)
  Inventories                    (19,719)    (22,276)    (42,222)   (43,702)
  Prepaid expenses and                                                      
   deposits                          705      (6,888)       (406)    (8,706)
  Trade, other payables and                                                 
   provisions                     (1,295)     49,649      93,577     95,486 
----------------------------------------------------------------------------
                                  39,355      (3,541)     80,060      3,163 
  Interest paid                   (4,240)     (2,221)    (11,864)    (5,077)
  Income taxes received                                                     
   (paid) - net                   (3,068)      2,625      (9,976)    (3,659)
----------------------------------------------------------------------------
NET CASH PROVIDED / (USED) IN                                               
 OPERATING ACTIVITIES             32,047      (3,137)     58,220     (5,573)
----------------------------------------------------------------------------
                                                                            
FINANCING ACTIVITIES:                                                       
  Increase in bank                                                          
   indebtedness                    5,272      13,359      16,632     13,359 
  Repurchase of common shares          -      (3,462)          -     (4,902)
  Contribution from non-                                                    
   controlling interest                -      67,924           -     67,924 
  Receipt of payment on notes                                               
   receivable for share                                                     
   capital                             -       1,925         602      1,925 
  Exercise of employee stock                                                
   options                           171           -         763        459 
  Increase in long-term debt      30,845     113,309     105,471    157,466 
  Repayment of long-term debt     (5,384)    (13,372)    (18,091)   (19,867)
                              ----------------------------------------------
NET CASH PROVIDED IN                                                        
 FINANCING ACTIVITIES             30,904     179,683     105,377    216,364 
----------------------------------------------------------------------------
                                                                            
INVESTING ACTIVITIES:                                                       
  Purchase of property, plant                                               
   and equipment                 (54,504)    (47,889)   (141,802)  (101,970)
  Acquisition of Honsel, net                                                
   of cash acquired (note 2)           -    (130,529)          -   (130,529)
  Proceeds from sale of                                                     
   Nuremberg facility -                                                     
   assets held for sale (note                                               
   2)                                  -      54,904           -     54,904 
  Promissory note (net of                                                   
   principal repayments)               -           -           -      1,500 
  Capitalized development                                                   
   costs                          (2,318)     (5,108)    (16,804)    (7,269)
  Proceeds on disposal of                                                   
   property, plant and                                                      
   equipment                       2,603          75       2,898        122 
----------------------------------------------------------------------------
NET CASH USED IN INVESTING                                                  
 ACTIVITIES                      (54,219)   (128,547)   (155,708)  (183,242)
----------------------------------------------------------------------------
                                                                            
Effect of foreign exchange                                                  
 rate changes on cash and                                                   
 cash equivalents                 (4,211)      2,639      (3,130)     2,428 
----------------------------------------------------------------------------
                                                                            
INCREASE IN CASH AND CASH                                                   
 EQUIVALENTS                       4,521      50,638       4,759     29,977 
CASH AND CASH EQUIVALENTS,                                                  
 BEGINNING OF PERIOD              26,743       5,366      26,505     26,027 
----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,                                                  
 END OF PERIOD                  $ 31,264   $  56,004   $  31,264     56,004 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes to the interim condensed consolidated financial      
statements                                                                  

Contacts: Martinrea International Inc. Fred Di Tosto Chief Financial Officer (416) 749-0314 (289) 982-3001 (FAX)



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