US: Arvin Meritor boosts Q1 net income 88%
ArvinMeritor has reported net income up 88% to US$34m, or $0.49 per share, compared to $18m, or $0.26 per share last year for its first fiscal quarter, ended 31 December, 2005.
Income from continuing operations, before special items, was $11m, or $0.16 per share - the higher end of the company's previous guidance.
Sales from continuing operations of $2.1 billion were up slightly from the same period last year.
Net debt improved $120m since 30 September, 2005 to the lowest level since the merger of Arvin and Meritor.
Cash proceeds, resulting from the sale of the company's off-highway brake assets and its 39% equity investment in Purolator India, were $48m.
"We delivered a good quarter and are pleased to have met first-quarter expectations at the higher end of our guidance, in addition to reporting another quarter of strong free cash flow. We are starting to see the benefits of the restructuring plan we announced in fiscal year 2005 and other aggressive cost reduction programmes, which continue to strengthen our global businesses," said company chairman, CEO and president Chip McClure.
In December 2005 the company sold its Asti, Italy ride control business. This sale, along with the previous divestiture of its shareholdings in AP Amortiguadores in fiscal year 2004, continues to move the company toward its plan to exit the light vehicle systems (LVS) ride control business, and focus resources on its core operations.
For the first quarter of fiscal year 2006, the company posted sales of $2.1bn, a 1% increase year on year. Stronger volumes in its commercial vehicle systems (CVS) business were largely offset by the loss of sales associated with divestitures and the impact of foreign currency translation, which lowered sales by approximately $65m when compared to the same period last year.
Operating income from continuing operations in the first quarter of fiscal year 2006 was $64m, up $24m from the prior year's first quarter. Included in operating income in the first quarter of fiscal year 2006 was a gain on the sale of certain assets of the company's off-highway brake business of $23m. Excluding this gain and restructuring costs, operating income would have been $42m. The benefits of stronger volumes in ArvinMeritor's CVS business, and cost reductions resulting from restructuring programs, were largely offset by the loss of income from previous divestitures and higher energy and pension costs.
Income from discontinued operations was $7m, or $0.10 per share, compared to $4m, or $0.06 per share in the same period last year.
The company's fiscal year 2006 outlook for light vehicle production is 15.6m vehicles in North America and 16.4m vehicles in Western Europe. The forecast for North American Class 8 truck production is 325,000 units in fiscal year 2006, up from the 305,000 units projected in our previous outlook.
For the second quarter of fiscal year 2006, the sales forecast for continuing operations is $2.2bn. The company's outlook for diluted earnings per share from continuing operations for the second quarter is $0.35 to $0.40, before special items.
McClure said, "Our sales from continuing operations in fiscal year 2006 are expected to be approximately $8.6 billion, unchanged from our previous outlook, and the outlook for full-year diluted earnings per share from continuing operations is in the range of $1.50 to $1.70, also unchanged."