Federal-Mogul Corporation (USA; NASDAQ: FDML) reported financial results for third quarter 2008, ended September 30.
NOTE: Because Federal-Mogul was operating under Chapter 11 bankruptcy protection through the end of fourth quarter 2007, eBearing believes there is no legitimate direct comparison to 2007 results (from the "Predecessor Company" to the "Successor Company," as it is called). Also, Federal-Mogul made numerous and consequential adjustments to reflect "fresh-start" financial reporting as it was exiting Chapter 11.
F-M is organized into six operating segments, generally corresponding to its major product groups: Powertrain Energy; Powertrain Sealing and Bearings; Vehicle Safety and Protection; Automotive Products; Global Aftermarket; and Corporate.
So far through 2008, F-M sales have been divided 63% from OEM and 37% from aftermarket.
Total sales in third quarter 2008 were USD $1.69 billion. Powertrain Sealing and Bearings was $266 million of that, third behind Global Aftermarket at $649 million and Powertrain Energy at $515 million.
Third quarter net income, however, was reported at just $3.6 million -- well within the results' rounding error. With $266 million in sales, Powertrain Sealing and Bearings' gross margin was $11 million, or 4.1%.
Jose Maria Alapont, F-M President and CEO, "The third quarter was increasingly difficult for the automotive industry. Our strong operating fundamentals served to limit the negative impact of the market downturn. As a result of our diversification, Federal-Mogul realized continued strong sales. The company's decisive response to the declining global automotive market, including sharp cuts in discretionary spending, coupled with a global restructuring program designed to eliminate excess operating capacity, reduce requirements for operations support and streamline SGA, enabled Federal-Mogul to realize another profitable quarter and positioned the company for this challenging market."
In September, F-M announced an as-yet-unimplemented program, "Restructuring 2009," to reduce the company's global workforce by 8%, or 4,000 positions. The location and scope of those reductions, plant closings, and/or unit consolidations are still unannounced. The Powertrain Sealing and Bearings operation currently shows $3.1 million set aside for restructuring activities, out of $16.3 million total set aside for six operating units.
To date, F-M has set aside $10.7 million for restructuring charges related to "Restructuring 2009," and said it expects to incur additional restructuring charges up to $69 million through 2009. The majority of those costs are expected to be severance costs, and are expected to yield annual savings equal to the costs. For Powertrain Sealing and Bearings, the grand total for "Restructuring 2009" is budgeted at $16.3 million.
After trading as high as $27 after emerging from bankruptcy on January 1, F-M has been hard-hit and recently traded in the $5 range.
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