Federal-Mogul Corporation (NASDAQ:FDML) has announced that third quarter 2012 sales were $1.6 billion, down 2% compared to Q3 2011, or down 8% when including the negative impact of currency exchange.
Constant dollar sales in Europe fell by 7% as vehicle production and aftermarket demand decreased due to the overall market downturn. Sales in North America were 2% higher, partially offsetting European market weakness.
Federal-Mogul reported a net loss of $(11) million in Q3 2012. The lower income was primarily due to the impact on margins of lower European volumes, combined with adverse regional and product mix. As a result of these factors, Operational EBITDA was $101 million or 6.3% of sales.
Federal-Mogul began operating with two end-customer focused business segments, each with a Chief Executive Officer reporting to Federal-Mogul’s Board of Directors in Q3 2012. Federal-Mogul’s Powertrain segment focuses on original equipment products for automotive, heavy-duty and industrial applications. The Vehicle Components Solutions segment sells and distributes a broad portfolio of products in the global vehicle aftermarket, while also serving original equipment (OE/OES) manufacturers with products including braking, chassis, wipers and other vehicle components.
Federal-Mogul’s Powertrain segment had global revenue of $982 million, down 4% in constant dollars, or down 10% including the impact of negative exchange. Powertrain sales were largely flat in North America and Rest of World (ROW), while in Europe revenue fell by 8% as a result of reduced light and commercial vehicle production. The Powertrain segment recorded Operational EBITDA of $52 million or 5.3% of sales, compared to $109 million or 10% of sales in Q3 2011.
“Federal-Mogul had a good quarter in North America, but we are again reacting to challenging market conditions in Europe, where customers are reducing vehicle production in response to weak economic conditions,” stated Rainer Jueckstock, co-CEO, Federal-Mogul and CEO Powertrain segment. “We are reducing headcount and production schedules at several sites, while at the same time ensuring that we maintain readiness to respond to improved industry volumes when the European market returns to normal levels,” he added.
Vehicle Components Solutions Segment
Federal-Mogul’s Vehicle Components Solutions segment had total revenue of $725 million up 1% on a constant dollar basis, or down 4% including the impact of negative exchange. North American revenue increased by 4%, offsetting a 4% decline in Europe. The softer sales were driven by macroeconomic factors impacting all OE and aftermarket customers in the region. The VCS segment recorded Operational EBITDA of $49 million or 6.8% of sales, compared to $52 million or 6.9% of sales in Q3 2011.
“We are encouraged by stable volumes in North America and are keeping pace in Europe in spite of significant market pressure. We are implementing previously announced restructuring actions to improve our manufacturing footprint in key product areas while simultaneously realigning the organization to increase speed to market,” stated Michael Broderick, co-CEO Federal-Mogul and CEO Vehicle Components Solutions Segment.
“We have implemented actions to reduce the impact of current European softness and are beginning similar moves to adjust for slower growth rates in other markets,” addded Alan Haughie, Federal-Mogul Chief Financial Officer. “We continue to see long term vehicle production rates climbing, although at slower rates than previously forecast. We will strengthen our focus on margin improvement and return on assets as we begin to more fully realize the opportunity to refine our business models in line with the company’s segmentation.”
Posted by: Paul Whittaker, Editor ipmd.net, [email protected]