SOUTHFIELD, MI — Federal-Mogul has reported its financial results for the second quarter, which ended on June 30.
Federal-Mogul reported 2004 second quarter net sales of $1,577 million, an increase of $149 million or 10 percent when compared to net sales of $1,428 million for the same period in 2003. Second quarter 2004 sales benefited from $44 million of foreign currency, higher volumes in both the Original Equipment (OE) and the aftermarket and new business growth in both markets. Customer price reductions partially offset these positive factors.
Gross margin increased $25 million or 9 percent during the second quarter of 2004 as compared with the second quarter of 2003. Favorable foreign currency of $7 million, increased sales volumes and continued productivity resulting from the company’s cost reduction and restructuring activities were partially offset by customer price reductions and increased costs of certain raw materials.
The company reported income from continuing operations before income taxes of $11 million during the second quarter of 2004, compared with $19 million for the same period in 2003. The company’s 2004 second quarter results were adversely impacted by an asset impairment of $20 million related to one of the company’s European powertrain operations. This asset impairment reflects the reduction of the carrying value of certain tangible assets, principally machinery and equipment, to their estimated fair values based on projected future asset recoverability. Selling, general and administrative costs decreased as a percentage of sales from 16 percent to 14.9 percent, despite unfavorable foreign currency of $6 million.
The company continued to generate positive cash from operating activities during the second quarter of 2004, providing $162 million for the period. This included $20 million of insurance proceeds that helped offset the impact of a fire that occurred on March 5, at the company’s Smithville, Tenn., aftermarket distribution center.
For more information on Federal-Mogul, visit: www.federal-mogul.com.
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