Arvin Meritor has reported a full year net loss and said that until it sells its light vehicle division, the unit will may continue to weigh down on its overall performance.
The company said that sales from continuing operations for fiscal year 2008 were US$7.2 billion, up 11% compared to fiscal year 2007, due to strength in Europe and South America. The increase was 4% at constant exchange rates.
However, the company’s net loss was $101m, or a loss of $1.40 per diluted share, due to non-cash income tax charges of $183m which the company incurred in the fourth quarter primarily to repatriate cash to the US.
Earnings per share from continuing operations, before special items, were $1.60 per diluted share, compared to $0.53 per diluted share in fiscal year 2007 – in line with the company’s full year guidance.
“Our team executed well in fiscal year 2008,” said chairman, CEO and president Chip McClure. “We increased margins by 1.8 percentage points, before special items, in our Commercial Vehicle Systems business by sharpening operational performance in all regions, and we achieved our targeted savings of $75m in cost reductions through our global Performance Plus profit improvement program.
“Although commercial and light vehicle volumes in North America were down dramatically from fiscal year 2007, we increased revenue from customers in Europe, South America and Asia Pacific,” said McClure.
Fourth-quarter sales were $1.7 billion, up 8% from the same period last year. Net loss from continuing operations was $165m, or a loss of $2.29 per diluted share.
Fourth-quarter income from continuing operations, before special items, was $28m, or $0.38 per diluted share, compared to a loss of $4m, or $0.06 per diluted share in fiscal year 2007.
Operating income in the fourth quarter of 2008 was $40m, compared to a loss of $16m in the fourth quarter of fiscal year 2007.
“Our results in fiscal year 2008 indicate that we have improved our ability to consistently run leaner operations, produce highly-engineered products for our customers, execute acquisitions, and manage the business at a profitable level despite a longer than anticipated downturn in the North American Class 8 truck market,” said McClure.
The company also announced that its plans to sell its light vehicle unit. “Declining global market and credit conditions are the primary factors that have led us to expand our options for separating the LVS business group, excluding the wheels business located in South America and Mexico,” said McClure. “After a comprehensive review of those options, we have determined that a sale will be our primary focus.”
ArvinMeritor said it forecast that North American Class 8 truck production would be in the range of 200,000 to 220,000 units in calendar year 2009, approximately the same as in 2008. The company’s forecast for heavy and medium truck volumes in Western Europe is in the range of 400,000 to 450,000 units, down approximately 25% from fiscal year 2008.
ArvinMeritor said it expects the LVS businesses to be separated during 2009.
“The LVS outlook continues to be weak and may negatively affect the company’s overall financial condition and GAAP results of operations until the point of sale,” the company said.
Sales for fiscal year 2009 are forecasted to be in the range of $4.9 billion to $5.2 billion. The company expects earnings per diluted share, excluding special items, to be in the range of $0.80 to $1.00.