Federal-Mogul has reported its third quarter net earnings at just US$4m, 71% down on the same period last year.

However, the firm said its 'solid' results were comparable with last year and that third quarter 2008 performance 'was attained in a far more challenging market environment than in the third quarter of the prior year'.

Federal-Mogul sales for the three-month period ending September 30, 2008, increased US$6m to US$1,692m, compared to $1,686 million during the same period a year ago.

"The third quarter was increasingly difficult for the automotive industry. Our strong operating fundamentals served to limit the negative impact of the market downturn. As a result of our diversification, Federal-Mogul realized continued strong sales. The company's decisive response to the declining global automotive market, including sharp cuts in discretionary spending, coupled with a global restructuring program designed to eliminate excess operating capacity, reduce requirements for operations support and streamline SG&A, enabled Federal-Mogul to realize another profitable quarter and positioned the company for this challenging market," said Jose Maria Alapont, Federal-Mogul president and CEO.

Federal-Mogul said that gross margin was unchanged over last year at 16.5% of sales in the third quarter, while operational EBITDA was up to 10.5% of sales, compared to 9.8% during the same period in 2007.

It reported sales of US$5.55bn for the nine-month period ending 30 September, 2008, an increase of US$381m or 7% versus US$5.17bn for the same period in 2007.

Net income was US$62m during the first three quarters of 2008, up from US$22m during the first three quarters of 2007.

Last month Federal-Mogul announced a global restructuring plan designed to improve operating performance and respond to the challenging conditions in the global automotive industry. The plan, when combined with other workforce adjustments, is expected to reduce the company's global workforce by approximately 4,000 positions or 8%. The planned actions include several initiatives designed to streamline business processes, consolidate or close selected locations, and reduce general and administrative staffing.

"During these challenging times, consistent execution of the company's proven strategy for sustainable global profitable growth helped to offset the market downturn and strengthen overall performance," said Alapont.

"Federal-Mogul has an established track record for restructuring to sustain operating performance and, furthermore, we possess a solid capital structure, considerable liquidity and a favorable bank financing package. This should enable us to retain our leading market position and prepare the company for future growth opportunities through organic growth or market consolidation," he added.

"We will continue to focus on our strong fundamentals, including world-class engineering and manufacturing with a cost-competitive global footprint; leading technology and innovation in vehicle and industrial products for fuel economy, alternative energies, emissions reduction and safety systems; with long-term customer relationships built on excellence in products and services, supply chain and operating performance," Alapont said.

See also: US: Federal-Mogul to further streamline operations

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