DETROIT -- ArvinMeritor Inc. faces a tough year ahead after its fourth fiscal-quarter 2005 earnings fell below analysts' expectations -- despite an extensive restructuring.
Although the company expects steel prices to moderate in 2006, CEO Chip McClure cautioned that high energy prices will continue to hurt the company's bottom line.
"For 2006, we continue to see a tough industry environment ahead," McClure said in a conference call to analysts on Tuesday, Nov. 15.
ArvinMeritor posted a $19 million loss for the fourth quarter, ended Sept. 30, an improvement over a $153 million loss for the year-ago period.
For the fiscal year, ArvinMeritor, of Troy, Mich., posted a $12 million profit on sales of $8.90 billion, compared with a $42 million loss on sales of $8.03 billion for fiscal 2004.
ArvinMeritor failed to get the bounce some analysts had hoped for from a restructuring last spring. Those actions included closing six plants globally and cutting 1,850 hourly jobs and 400 to 500 salaried positions. The company expects the $50 million to $60 million savings to take effect in 2007.
ArvinMeritor expects profits from continuing operations next year to be from about $105 million to $120 million.
After the company's Nov. 15 report, its stock dropped by 12.7 percent, from $17.28 a share to $15.09 a share for the day.
Brett Hoselton, an automotive analyst for KeyBanc Capital in Cleveland, called those projections a disappointment. "You'd hope the company would see material improvement in earnings as a result of all this restructuring. Instead, they appear to have plateaued," he said in an interview last week.
The company makes suspensions, door modules, roof systems and emissions products including exhausts for cars and light-duty trucks. It also makes axles, drivelines, brakes and exhausts for heavy trucks.
"Overall, they appear to be doing the right things," Hoselton said.
McClure said ArvinMeritor is basing its forecast around car and light-truck volumes of 15.6 million units in North America and 16.4 million in Europe. ArvinMeritor has reduced its dependence on the Big 3 to 20 percent of revenues, with General Motors at only 7 percent, McClure said.
ArvinMeritor ranks No. 19 on the Automotive News list of the top global suppliers with estimated worldwide original-equipment automotive parts sales of $7.07 billion in fiscal 2004.
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