Light and heavy commercial vehicle components specialist ArvinMeritor plunged into the red during its first fiscal quarter ended 30 December, 2007.
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On a GAAP accounting basis, the supplier posted a net loss from continuing operations of $1m or $0.01 per share. This compared with net income of $10m ($0.14 per share) in the same period a year ago.
Net income from continuing operations, before special items was down 50% to $6m ($0.08 per share) compared to the $12m ($0.17 a share) earned in Q1 2006/7.
Sales rose $95m to $1.7bn, however.
“Despite a weak economy in North America and challenging global industry conditions, sales were up compared to the first quarter of last year for both commercial vehicle systems (CVS) and Light Vehicle Systems (LVS), due in part to favourable currency exchange rates,” the company said in its results announcement on Wednesday.
EBITDA, before special items, was $82m, up $10m due mainly to improved CVS operating results driven by the company’s performance plus programme.
Chip McClure, chairman, CEO and president said, “We demonstrated stronger operating performance this quarter despite Class 8 [truck] volumes being down approximately 50% in North America. The actions we have implemented through our Performance Plus program, particularly in Europe, are gaining traction and driving improved EBITDA and margins.”
Special items for the quarter included charges associated with the company’s previously announced restructuring programme.
Arvin Meritor said the decrease in earnings this quarter reflected charges incurred during the first quarter of fiscal year 2008, including $0.09 per share for a legal and commercial dispute with an LVS customer, $0.08 per share resulting from tax charges; and $0.03 per share related to amendments to its credit agreement, all partially offset by $0.13 per share relating to changes in employee benefit policies.
Outlook
The company has reduced its calendar year 2008 forecast for light vehicle sales to 15.5m vehicles in North America, down from the 15.7m predicted in December. The forecast for western Europe remains at 17.1m vehicles.
The fiscal year 2008 forecast for North American Class 8 truck production is in the range of 210,000 to 230,000 units, and for 530,000 to 540,000 heavy and medium trucks in western Europe.
On a calendar year basis, the company anticipates North America Class 8 truck production to be in the range of 235,000 to 255,000 units; and heavy and medium truck output in western Europe in the range of 540,000 to 550,000.
ArvinMeritor expects sales from continuing operations in fiscal year 2008 in the range of $6.9bn to $7.1bn due to continued growth outside the US and favourable foreign exchange movements.
The outlook for full-year EBITDA from continuing operations, before special items, is expected to be in the range of $385m to $405m for the fiscal year.
ArvinMeritor reaffirmed its forecast earnings per share from continuing operations, before special items, to be in the range of $1.40 to $1.60, based on the assumption of 2.2% US GDP growth, and excludes gains or losses on divestitures and restructuring costs.
“The improvement in our operating performance this quarter indicates that the actions we are implementing, driven primarily through our performance plus profit improvement program, are taking effect,” said ArvinMeritor CEO ‘Chip’ McClure.
“We are on track to achieve cost-savings of $75m this year, and are pleased that ideas already implemented total $58m in savings on an annual run rate basis.”
