Federal-Mogul said second quarter 2012 sales were US$1.7bn, down 5% versus Q2 2011, as it booked a net loss of $59m after charges relating primarily to brake friction business intangible assets.
Operational EBITDA1 was $159m or 9.3% of sales, down from Q2 2011 due to the impact of lower sales, negative exchange and unfavorable product and regional mix.
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“We are taking the necessary actions to restructure our business for improved profitability and to meet customer expectations for leading technology at competitive costs,” said Michael Broderick, Federal-Mogul aftermarket division chief executive officer. “This will be especially beneficial when supplying products to the aftermarket where price competition is a more significant factor in purchase decisions.”
Global original equipment sales in Q2 were $1.1bn, up 3% Q2 2011, driven by a 9% OE sales increase in the United States and 7% OE sales increase in the BRIC markets, off-setting a 4% revenue decline in Europe. Light vehicle production in Europe during the quarter decreased 9% versus Q2 2011.
The company’s global aftermarket sales were $566m or 3% lower on a constant dollar basis versus Q2 2011.
The company in Q2 2012 had a gross margin of $255m or 15% of sales, compared to $299m or 16.6% in Q2 2011.
The company began a restructuring programme in Q2 2012 to further shift production of brake friction and wiper products to lower-cost locations within the company’s global manufacturing network, including a recently acquired brake friction facility in Mexico. The restructuring programme involves the closure or substantial downsizing of selected brake friction and wiper manufacturing sites over the next 18 months and is expected to cost $60m. An initial charge of $7m for restructuring was recorded during the second quarter.
