American Axle & Manufacturing Holdings, Inc. (AAM) reported fourth quarter earnings per share of $US0.61 compared to 96 cents per share in Q4 2003. Earnings for full year 2004 were $159.5 million compared to $197.1 million in 2003. Full year earnings per share were $2.98 ($3.70).
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AAM’s results for 2004 include the impact of a one-time charge of $23.5 million related to debt refinancing and redemption activities in the first quarter of 2004 and a charge of $10.0 million related to lump-sum voluntary separation payments accepted by 186 hourly staff in the fourth quarter of 2004. Excluding the impact of these charges, AAM’s earnings for the full year 2004 would have been about $3.40 per share.
“As we previously reported, our sales were lower than expected in the second half of 2004 due to the impact of lower production volumes scheduled by our customers. We also experienced the structural cost impact of higher steel and other metallic material prices,” said AAM chairman and CEO, Richard Dauch.
Sales for Q4 2004 were $875.6 million compared to $926.1 million the previous year.
Non-GM sales represented 20% of total sales in the quarter compared with 18.7% in the fourth quarter of 2003.
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By GlobalDataAAM’s full year ’04 sales were $3.6 billion compared to $3.7 billion in 2003.
Non-GM sales increased by more than $50 million for the year to $728 million, or 20% of total sales in 2004 compared with 18% in the prior year.
However, lower GM light truck production volumes resulted in an overall decrease in AAM’s full year 2004 sales compared to 2003. Sales content per vehicle was $1,173 for the full year 2004, approximately the same as in 2003.
Operating income was $47.8 million or 5.5% of sales in the fourth quarter of 2004 compared with $91.5 million or 9.9% of sales for the fourth quarter of 2003. Operating income in 2004 was $284.8 or 7.9% of sales compared with $346.3 or 9.4% of sales in 2003.
The lower fourth quarter and full year 2004 operating incomes reflect the impact of higher steel and other metallic material prices, as well as the $10.0 million charge related to lump-sum voluntary separation payments accepted by 186 hourly workers in the fourth quarter of 2004.
Capital spending in the fourth quarter of 2004 was $81.4 million and totalled $240.2 for the year.
Research and development (R&D) spending increased approximately 13% in 2004 to $68.6 million compared with $60.7 million in 2003.
AAM is expanding its existing light truck and SUV product lines to support new programmes and derivative models and is developing new passenger car and crossover vehicle applications utilising independent front drive axles (IFDA), rear drive modules (RDM) and independent rear suspension modules (RSM) targeted at growth segments of the market. As a result, it recently announced that it has increased its backlog of new business by nearly $500 million to more than $1 billion in future annual sales.
AAM also confirmed the 2005 earnings outlook announced on January 13 – it expects its 2005 earnings to be approximately $2.40 to $2.55 per share, based on the assumption that its customers’ production volumes for the major North American light truck programmes it currently supports will be approximately 8% lower than in 2004.
The 2005 earnings outlook also assumes that the cost of steel and other purchased metal market commodities will continue to increase in 2005.
Earnings for the first quarter of 2005 are expected to be approximately $0.40 to $0.45 per share.
“2005 will be a challenging year for the entire domestic automotive industry [and] the same is true for AAM,” said Dauch. “Our task in 2005 is to keep focused on our long-term strategic goals of further developing our product offerings, customer diversification and global manufacturing presence to prepare for significant future profitable growth.”
