Dana Holding Corporation on Thursday said it would close up to 10 more plants in 2009 and 2010 and axe an additional 2,000 jobs this year after turning in a miserable set of third quarter results, though it was in the black for the nine-month period.
Though sales slipped only 9% year on year to $1,929m, mainly because of lower vehicle production in North America, the supplier and chassis specialist posted a net loss of $271m compared with a net loss of $69m a year ago, though this year’s result did include $123m of non-cash goodwill and other impairment charges.
Earnings before interest, taxes, depreciation, amortisation, and restructuring (EBITDA) plunged to $15m versus $126m in 2007.
But Dana said it held a strong cash balance of $1.0bn and total liquidity of $1.3bn at 30 September, offsetting net debt of $380m.
“The economic and market challenges we’ve faced all year were particularly difficult in the third quarter,” said chairman John Devine. “The combination of lower industry volumes and peaking steel prices hit us sharply this quarter.
“Dana is planning up to 10 additional plant closures in 2009 and 2010, and we will reduce our workforce this year by 5,000 versus the previously announced 3,000. We regret having to take such actions, but they are necessary to size the company to lower industry volumes.”
Third-quarter EBITDA of $15m was $111m below 2007 results for the same period. Lower production and higher steel costs of $140m more than accounted for the reduction, Dana said. Results also included higher pricing, cost savings, and unfavourable currency changes.
Sales for the nine months to 30 September were $6,574m versus $6,564m a year ago.
Year to date net income of $274m compared with a net loss of $294m in 2007. But the nine-month 2008 results include a net gain of $754m recognised in connection with the company’s emergence from bankruptcy and application of ‘fresh start accounting’ in January.
Year-to-date EBITDA $290m compared to $373m in 2007, as the earnings reduction related to lower North American vehicle production and higher steel costs more than offset cost reduction actions and pricing improvements.
Based on current production estimates, Dana expects full-year 2008 sales of approximately $8,200m and EBITDA of approximately $300m.
CFO Jim Yost said Dana expected to complete an amendment to its credit facility with lenders in the next few weeks.
In 2009 Dana expects to improve EBITDA by at least $150m, primarily through price rises and cost reductions, and is targeting break-even or better free cash flow.