Federal-Mogul plans more plant closings amid cash burn, third straight quarterly loss
DETROIT (Bloomberg) -- Federal-Mogul Corp. said the slowdown in Europe's vehicle market contributed to a third straight quarterly loss and will force more plant closings in the region.
Federal-Mogul said today that it will shut more factories, mostly in western Europe, and shift the work by 2015 to lower-cost locations such as Mexico, China and Poland.
Last year, the Southfield, Mich.-based company announced a $60 million restructuring that included closing three plants by this July. Vehicle sales in Europe slumped to a 19-year low in 2012 and the outlook remains bleak this year.
"This was really a very disappointing quarter," said Brian Sponheimer, a Gabelli & Co. analyst in Rye, N.Y.
Sponheimer, who has a buy rating on the company's shares, said Federal-Mogul "needs to effectively address its cash in 2013 and there needs to be a clearer path toward profitability" in its division that sell to automakers.
Federal-Mogul said in a statement today that it used $480 million more cash in 2012 than it took in, and ended the year with $467 million in cash.
The company's fourth-quarter net loss narrowed to $80 million, or 81 cents a share, from $239 million, or $2.42, a year earlier, the company said.
The loss excluding items such as legal, impairment and restructuring costs was $41 million, Federal-Mogul said. The single analyst estimate compiled by Bloomberg was for adjusted profit of $15 million.
Sales fell 3.6 percent to $1.6 billion, beating the $1.55 billion average of two estimates. Gross margin fell to 10.5 percent of sales, from 14.9 percent a year earlier.
Federal-Mogul didn't break out its 2012 sales by country or region. In 2011, Germany, France, Italy, Switzerland and the United Kingdom combined for 39 percent of the company's revenue, according to data compiled by Bloomberg.
The company's shares closed down 63 cents, or 7 percent, at $8.45 in Nasdaq trading on Wednesday. The shares had gained 13 percent this year through Tuesday, as the Standard & Poor's 500 Index rose 5 percent.
The auto-parts supplier is controlled by billionaire Carl Icahn, who controlled 78 percent of Federal-Mogul's shares as of Dec. 31, according to data compiled by Bloomberg.Contact Automotive News