SOUTHFIELD, Mich. -- Federal-Mogul has reported full year 2008 sales of $6.9 billion, in line with 2007, despite a drop in sales of $430 million in the fourth quarter of 2008 versus the prior year due to an unprecedented decline in the automotive market. The company implemented aggressive global restructuring and cost reductions, which helped offset the impact of the sales decline in the fourth quarter.
"Federal-Mogul's sales and operating performance in the first three quarters of the year, combined with actions to manage the impact of the global market downturn resulted in solid sales, annual gross margin and operational EBITDA, coupled with strong cash flow in the fourth quarter and for the full year," said Jose Maria Alapont, president and CEO.
The company recorded year-over-year cumulative sales growth of 7 percent in the first three quarters of 2008 versus the same period in 2007. Federal-Mogul experienced the impact of a significant drop in sales during the fourth quarter and finished the year with sales of $6.9 billion, as in 2007. The company's diverse customer and geographic base resulted in over 60 percent of sales from outside the United States, with no single customer accounting for more than 6 percent of total sales. Federal-Mogul recorded sales in the fourth quarter of 2008 of $1.3 billion, a 25 percent reduction versus $1.7 billion for the same quarter of 2007.
"We have experienced an unprecedented global automotive market decline. Federal-Mogul is facing the challenge of crossing the desert of this downturn with efficient action plans, urgency, strength and relentless execution," said Alapont.
"Federal-Mogul implemented numerous measures to reduce both variable and fixed costs in order to offset the anticipated sales decline during the fourth quarter. We have implemented a variable cost company strategy where our global sites have eliminated premium shifts, modified shift patterns, established short workweek schedules and reduced headcount. These measures drove a 23 percent reduction in total operating costs during the quarter. This global effort to make Federal-Mogul's cost base vary in line with sales fluctuations limited the impact of this major downturn and helped the company to report solid sales, financial performance and cash generation in 2008. We are facing the challenge of the difficult market downturn and we expect to become leaner, stronger and more competitive after successfully crossing the desert," he continued.
Federal-Mogul during the second half of 2008 announced restructuring actions designed to adjust global capacity and company infrastructure in line with reductions in current market demand. The restructuring will include the closure of manufacturing plants and distribution centers, flexing global capacity, along with several actions to streamline support staffs and is expected to reduce company headcount by approximately 26 percent in comparison to the July 31, 2008 level.
