Dana has recorded second-quarter net income down 45% to US$68m due to a pension settlement, although sales increased by US$253m to US$2.3bn.
“Dana delivered another strong performance this quarter, keeping us on track to achieve a third consecutive year of double-digit sales and profit growth,” said James Kamsickas, Dana president and CEO, James Kamsickas.
“Due to stable end markets, our strong sales backlog, and accretive acquisitions, we increased sales by 12% over last year and achieved improved margin performance. Our intense focus on customer satisfaction and cost discipline, combined with steady organic and inorganic growth is positioning us to finish the year strong.”
The American supplier is attributing the net loss of US$68m as primarily due to US$258m in one-off pension settlement charges related to the transfer of future pension liabilities from a US pension plan to third-party insurers in the second quarter of 2019.
Partially offsetting this one-time charge was a net tax benefit of US$87m in this year’s second quarter driven by the pension termination and foreign tax credits. The second quarter of 2018 also included a US$39m tax benefit related to tax credits and valuation allowance releases.
Excluding these one-time income tax and pension charges, second-quarter net income was US$103m in 2019, compared with $85m in 2018, reflecting increased operating earnings this year associated with higher sales.
The company is affirming full-year 2019 financial targets with sales of US$8.9bn to US$9.4bn.
“Organic growth and cost synergies related to our acquisition of the Fairfield and Graziano businesses more than offset higher commodity costs and currency headwinds this quarter,” said Dana EVP and CFO, Jonathan Collins.
“We also took steps to further strengthen our balance sheet by eliminating US$165m of unfunded pension obligations. As we move into the second half of the year, we have maintained our full-year outlook ranges despite a stronger US dollar.”