Tier One auto supplier ArvinMeritor has reported a large rise in its operating loss for the first fiscal quarter ended 28 December, 2008 on sales down 18% year on year.
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The net loss from continuing operations was US$991m or $13.71 per share, compared to $1m or $0.01 per share in the same period last year. Sales were down $293m, or 18%, to $1.4bn.
Non-cash charges of $944m included valuation reserves for deferred tax assets, and other asset impairments, primarily for the light vehicle systems (LVS) unit’s goodwill and fixed assets.
The loss from continuing operations, before special items, of $56m, or $0.77 per share, compared to income from continuing operations, before special items, of $6m, or $0.08 per share in Q1 2007/2008.
EBITDA, before special items, was $10m, down $72m year on year, and due primarily to lower production volumes in most original equipment manufacturer market segments globally.
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By GlobalData“Although significant volume declines and charges associated with the LVS business negatively affected our results this quarter, we are aggressively executing a series of actions to help mitigate the effects of the ongoing economic crisis,” said ArvinMeritor chairman, CEO and president Chip McClure.
“Through continued focus on reducing costs, strengthening the aftermarket business and gaining new military contracts, the commercial vehicle systems (CVS) business performed well. Despite the severe downturn in heavy truck markets in most regions of the world, the CVS team was able to offset the negative volumes with minimal impact on performance.”
ArvinMeritor said that, as previously announced, economic conditions now do not support the company’s previous strategy to sell the entire LVS business.
“Due to continued deterioration in the global markets, it is now our priority to complete the divestiture of these businesses separately at acceptable returns to [shareholders],” said McClure.
Outlook
“ArvinMeritor is operating with the expectation that global markets will remain weak for an extended period of time,” said McClure. “Given the deterioration of the market environment and the current global constraints on credit, the management team remains intensely focused on maintaining the liquidity necessary to operate our business. We expect to be in compliance with the financial covenants in our material borrowing arrangements for the remainder of the year and believe that the actions we are taking today will help position the company well when economics and volumes improve.”
