ANN ARBOR, Mich. – Affinia Group has reported its financial results for the fourth quarter and full year ended Dec. 31, 2012.
In December, the company distributed its brake business to its shareholders in the fourth quarter of 2012. As a result, the financial performance of these entities is reflected in discontinued operations for financial reporting purposes.
Excluding unfavorable currency translation effects, year-over-year consolidated net sales improved by $63 million. On an as-reported basis, full year 2012 consolidated net sales decreased by $25 million to $1.45 billion, as compared to $1.48 billion for full year 2011, representing a 2 percent decrease in net sales versus last year. Lower currency exchange rates, primarily related to the Polish zloty and Brazilian real, reduced reported sales by $88 million, which was partially offset by increased sales to new and existing customers.
Filtration products net sales were $831 million in 2012, a $30 million increase as compared to 2011. Affinia said the 4 percent improvement was attributable to $49 million of increased sales to new and existing customers, which was partially offset by $19 million of unfavorable currency translation effects, primarily due to depreciation of the Polish zloty.
Affinia South America products net sales, excluding unfavorable translation effects, rose by $30 million. Reported net sales, including unfavorable translation effects, declined by 8 percent to $430 million in 2012 as compared to $469 million in 2011. Substantial currency depreciation of South American currencies, primarily the Brazilian Real, accounted for a year-over-year net sales decline of $69 million, which was partially offset by net sales improvement due to price increases on certain products and new business in our distribution and shock absorber operations.
Chassis product net sales declined by $19 million, or 9 percent in 2012, to $194 million, down from $213 million in 2011. According to Affinia, the decrease in sales was attributable to significant initial order fulfillments recognized in 2011, whereas 2012 sales represented a more normal run rate for the new business.
Operating profit in 2012 was $131 million, down by $11 million, or 8 percent, versus 2011, primarily due to a lower gross profit. The on- and off-highway segment’s reportable operating profit declined by $4 million due to lower gross profit. Corporate, eliminations and other reported a $7 million year-over-year increase in operating loss due to higher legal and professional expenses related to special projects.
Net income from continuing operations, net of tax, declined by $19 million, or 46 percent, to $22 million in 2012 as compared to $41 million 2011. The increase in net loss was due to a higher tax provision and lower gross profit in 2012 as compared to 2011.
The company reported a $124 million loss from discontinued operations, net of tax, in 2012 compared to a $113 million loss in 2011. The loss from discontinued operations, net of tax, in 2012, was comprised of an $86 million impairment charge, a $5 million operational loss, and an income tax provision of $33 million. The loss from discontinued operations, net of tax, in 2011 was comprised of $165 million impairment and an operational loss of $9 million, before adjustment for a net tax benefit of $61 million related to discontinued operations, which included a $57 million tax benefit related to an impairment loss.
Primarily as a result of the loss from discontinued operations, the company posted a net loss attributable to the company of $103 million in 2012 versus a net loss of $73 million in 2011.
Fourth Quarter
Net sales for the fourth quarter of 2012 were $341 million, a decline of $3 million versus the same period in 2011.
Gross profit for the fourth quarter 2012 was $74 million, as compared to $78 million for the same period in 2011. Gross margin was 1 percent lower in the fourth quarter of 2012 at 21.7 percent versus 22.7 percent in the fourth quarter of 2011.
Net income for the fourth quarter of 2012 was a loss of $81 million as compared with a loss of $104 million in the same period in 2011. The 2012 decrease in net loss was attributable to a $32 million decrease in loss from discontinued operations, net of tax, partially offset by $9 million lower net income from continuing operations.
