American Axle Pulls Off Profit But Sales Slide Expected for This Year

From Detroit Free Press

DETROIT — American Axle & Manufacturing Holdings Inc. narrowed its loss for its fourth quarter and managed to post a profit for the year, turning around a steep loss from 2006.

Completing what the company’s top executive Dick Dauch called a transformational year, American Axle’s results were driven by attrition programs that drew 2,500 salaried and hourly positions out of Detroit’s second-largest automotive company.

Those job reductions are expected to save American Axle more than $100 million a year.

But the ups and downs may not be over for American Axle. The company faces sales declines as its largest customers — General Motors Corp. and Chrysler LLC — cut production of pickups and SUVs, which have been American Axle’s bread-and-butter vehicles.

American Axle is in the middle of contract talks with the UAW and is pushing for lower wages for workers who had come from General Motors. American Axle was formed out of five former GM parts plants.

The company also faces a rejuvenated rival in Toledo, OH-based Dana Corp., which emerged from Chapter 11 bankruptcy protection Friday.

For the last three months of 2007, American Axle posted a loss of $25.5 million, or 50 cents a share, on sales of $755 million. That compares with a $188.6-million loss, or $3.74 a share, on sales of $781 million for the same period in 2006.

The loss in the fourth quarter — after three consecutive quarterly profits — mainly comes from costs associated with buyout and early-retirement offers that 558 workers accepted as the company idled its plant in Buffalo, NY.

Those and other restructuring efforts, such as moving equipment out of Buffalo to plants in Mexico and Michigan, cost the company $71 million, or 92 cents a share.

For 2007, American Axle earned $37 million, or 70 cents a share, up from a loss of $222 million, or $4.42 a share, in 2006. Sales were flat at $3.2 billion.

The company declined to offer earnings guidance for 2008. But this year, American Axle expects sales to slip to as low as $3 billion as its largest customers cut production. It expects its production to decline as much as 9 percent this year.

Despite the forecasts, American Axle’s stock rose $1.27, or 6 percent, to $23.08 Friday.

Separately, American Axle has elected to raise compensation for its directors that are not employed by the company — eight of the board’s nine members. They will receive a $10,000 raise to $50,000 a year. They also will see a $10,000 increase in the restricted stock they receive, to a value of $70,000 a year.