Federal-Mogul reports increased Q1 2012, sales driven by record Q1 original equipment sales

April 25, 2012

Federal-Mogul Corporation, Southfield, MI, (NASDAQ: FDML) has announced first quarter 2012 financial results, including record Q1 original equipment (OE) sales. Total sales were $1.8 billion, up 2% versus Q1 2011 reflecting 5% growth in constant dollars, partially offset 3% by weakness of international currencies, primarily the Euro, against the U.S. dollar.

Original equipment sales were up 8% to $1.2 billion, the highest ever first quarter level. Net income in Q1 2012 was $32 million or $0.32 per diluted share and EBITDA was $168 million or 9.5% of sales. Investment in growth and manufacturing infrastructure increased 30% in Q1 2012 versus Q1 2011 to support customer demand for higher-content technologies to improve fuel economy, reduce emissions and enhance vehicle safety.

“Federal-Mogul’s highly diverse customer base and strong position on key powertrain and vehicle technologies enabled the company to continue to grow and even outpace global vehicle production growth in key technologies and regions in Q1 2012,” stated Rainer Jueckstock, Federal-Mogul Chief Executive Officer.

“Strong global OE customer sales and stable aftermarket volumes resulted in another solid quarterly result. We continue on the same path with solid EBITDA performance while simultaneously investing in growth initiatives for the long-term to generate sustainable global profitable growth.”

All three of Federal-Mogul’s OE business segments had stronger Q1 2012 sales versus the same period of 2011, with the powertrain business recording the largest gains. The company experienced OE sales growth in all major operating regions with U.S. and Canada up 10%, Europe up 3% and Rest of World up 16%, including BRIC growth of 13%. The company’s global aftermarket continued to have stable global sales in Q1 2012 as compared to Q1 2011, with U.S. sales at a consistent level as the prior year same quarter, lower Europe sales and higher BRIC sales.

Federal-Mogul’s Q1 2012 gross margin was $277 million or 15.7% of sales as the company was impacted by unfavourable product and regional mix. These factors were partially offset by initiatives to improve efficiency, attain normalised production rates on new programmes and reduce direct material costs. The company has maintained overall employment at 45,000 over the last 12 months while increasing sales by 5% during the same period.

New technologies and innovations

Federal-Mogul’s investment in leading technology and innovation has resulted in new business wins such as brake friction business for low or zero copper brake pad formulations. The new business award is with a European luxury vehicle OEM and the product is scheduled to enter the market as early as 2014. New regulations in certain U.S. states mandate ultra-low to zero levels of copper in brake pads and these formulations are expected to become the de facto standard throughout many national markets where vehicle manufacturers utilise common global platforms.

Federal-Mogul’s technology development was also recognised in the annual Automotive News PACE(TM) Awards. This year, Federal-Mogul had two technology finalists in the annual competition: 2-D ultrasonic testing for automotive pistons and hybrid cylinder liners for automotive engines. The innovative 2-D ultrasonic testing process was awarded a PACE(TM) Award in the manufacturing process category in a ceremony on April 23, 2012.

Outlook

“While original equipment automotive market production growth is forecasted to continue on a global basis throughout 2012, this rate of growth is more moderate than the double-digit increases experienced in some quarters during 2010 and 2011,” said Jueckstock. “We expect to further optimise our manufacturing efficiency through productivity improvements as the rate of market growth stabilises and we bring our recent capital investments into operation at higher levels of capacity utilisation.”

“We expect to benefit from overall market growth and continued demand for higher content powertrain and vehicle technologies in 2012,” said Jueckstock. “Our customer and technology portfolio is diverse and we are well positioned to participate in market growth, and to strengthen market share through technology leadership. We are experiencing strong demand for technologies that improve fuel efficiency and reduce emissions, along with new vehicle safety technologies to meet regulations and provide greater vehicle differentiation. Federal-Mogul’s aftermarket business offers some of the world’s most widely respected premium brands, with clear advantages in performance and durability. The OE and aftermarket businesses of Federal-Mogul have a solid foundation from which to continue to grow as markets expand globally.”

www.federalmogul.com

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