Dana Sideswiped By Auto Woes
6/11/08
Source: http://www.forbes.com/markets/2008/11/06/dana-auto-vehicles-markets-equity-cx_ra_1106markets35.html
As the losses pile up, auto parts maker Dana Holdings announced it will try to control the damage by slashing jobs and shuttering plants.
On Thursday, Dana Holdings reported a whopping third-quarter loss as the crippling crisis in the auto market slammed the company.
"The economic and market challenges we've faced all year were particularly difficult in the third quarter," said Executive Chairman John Devine. "The combination of lower industry volumes and peaking steel prices hit us sharply this quarter."
Dana’s shares fell 10.1%, or 19 cents, to $1.70 in afternoon trading.
Devine said the company expects to close 10 additional plants in 2009 and 2010, and will slash an additional 2,000 jobs. He added that Dana anticipates taking a charge of between $100.0 million and $150.0 million for its plant closures, but will likely save $40.0 million annually once the plants are closed.
The company said it was talking to lenders about changing the terms on its credit facility because it will not be able to meet its financial covenants as of Dec. 31. Dana’s Chief Financial Officer Jim Yost expects to complete an amendment to the facility with lenders in the next few weeks.
Dana only emerged from bankruptcy in February of this year. The company posted a third-quarter net loss of $271.0 million, or $2.78 per share, including an $8.0 million dividend payout to preferred shareholders, down from a loss of $69.0 million, or 42 cents per share, in the prior year.
Sales slumped 9.0%, to $1.9 billion, due to lower vehicle production in North America. The company was also hit by volatile steel prices and the ailing equity markets, Yost said.
The company forecast declines of up to 12.0% in 2009 revenue to a range of $7.2 billion and $7.3 billion, down from a projected $8.2 billion this year, because of the weak North American market.
Last week, car and truck parts maker ArvinMeritor announced it is slashing 7.0%, or 1,250 jobs, of its workforce. It's also looking at alternatives to a spin-off of its car parts unit due to the turmoil in the credit and financial markets. The company is mulling a sale of the unit.
Meanwhile, on Oct. 31, American Axle & Manufacturing reported a third-quarter loss, because of production cuts by major customers due to the weakening auto market.
Job cuts have also recently been announced by Federal-Mogul and Tenneco.
