SOUTHFIELD, Mich. — Federal-Mogul Corp. today reported higher year-over-year quarterly sales and profitability as increased global new vehicle sales and company market share gains resulted in additional demand for its leading automotive powertrain and safety technologies. The company, during the third quarter 2010, reported 12 percent higher sales, or 16 percent in constant dollars, increased EBITDA of $25 million to $164 million and significantly higher net income of $53 million versus $10 million in the third quarter of 2009.
"Federal-Mogul delivered again on its commitment to develop sustainable global profitable growth through leading technology, innovation and strong financial performance during the quarter. Our solid increases in sales, EBITDA and net income are a result of our ability to efficiently utilize existing global capacity to satisfy increasing demand," said Jose Maria Alapont, Federal-Mogul president and CEO.
Federal-Mogul’s quarterly sales grew 12 percent, or 16 percent in constant dollars, to $1.54 billion in the third quarter 2010 versus $1.38 billion in the same period in 2009. The company’s original equipment (OE) business segments generated market share gains in all regions, demonstrating strong customer demand for Federal-Mogul’s products. Sales, on a year-to-date basis, increased 18 percent or $709 million, representing 19 percent on a constant dollar basis, versus the same period in 2009.
Federal-Mogul’s OE sales in BRIC markets were up 34 percent during the quarter and 48 percent on a year-to-date basis versus 2009, led by company sales in China, which increased 43 percent versus the third quarter 2009 and 78 percent on a year-to-date basis, versus the same period in 2009. Federal-Mogul’s European OE sales increased in the third quarter 2010, by 22 percent and 26 percent year-to-date, as diesel engine demand has increased to more than 50 percent of current new vehicle production. The company’s original equipment sales in North America were up 44 percent in the third quarter and 52 percent on a year-to-date basis, driven by strong full-size pickup truck sales and strong commercial vehicle fleet sales.
Federal-Mogul said it increased profitability through growth and continued efficient operation, resulting in net income of $53 million in the third quarter 2010 compared to $10 million in the third quarter of 2009. The company’s third quarter net income includes $30 million from operations and $23 million of non-operating income from curtailment gains, net of restructuring charges. EBITDA increased in the third quarter of 2010 by $25 million to $164 million, or 10.6 percent of sales, versus $139 million during the same period last year. On a year-to-date basis, EBITDA increased by $159 million to $501 million, versus $342 million in the first three quarters of 2009.
Federal-Mogul’s selling, general and administrative (SG&A) expenses in the quarter improved to $164 million or 10.6 percent of sales versus $173 million or 12.5 percent of sales, nearly 2 percentage points better than the third quarter of 2009. Federal-Mogul continues to operate with a lean global administrative structure and benefits from increased sales while leveraging current overhead to support the company’s global operations.
The company generated cash flow of $10 million during the third quarter 2010, resulting in year-to-date cash flow of $68 million, versus cash outflow of $(77) million during the same period of 2009. Federal-Mogul has solid liquidity of $1.6 billion, which is $300 million more than at the end of the third quarter 2009. The company has $1.1 billion in cash and an undrawn revolver in excess of $500 million.
Federal-Mogul noted that its market share growth is directly related to the company’s extensive portfolio of leading technology and innovation in powertrain and safety technologies. A recent study, jointly issued by the U.S. Environmental Protection Agency, U.S. Department of Transportation and the California Air Resources Board, concluded that the most significant and lowest cost opportunities for improving U.S. automotive fuel economy and reducing automotive carbon emissions until 2025 are through improvements to conventional combustion engine technology.
Federal-Mogul said it continues to develop and introduce leading technology and innovation to address the primary challenges to improve fuel economy, reduce emissions and thereby diminish the engine’s carbon footprint. During 2009 and 2010, Federal-Mogul has introduced numerous innovations that offer direct fuel efficiency improvements, or enable other fuel saving technologies through management of higher thermal, mechanical or combustion loads versus previous engine designs. Examples include DuraBowl Piston Reinforcement, EcoTough-Coated Pistons, IROX High Performance Engine Bearings, MicroTorq Engine Seals and other leading technologies designed to help automakers and engine manufacturers attain desired performance and efficiency.
The company added to its extensive list of fuel efficient technologies during the third quarter, with the introduction of the new Magnum Monosteel commercial vehicle piston, which offers significant friction and reciprocating mass reduction versus conventional commercial vehicle engine pistons. Magnum Monosteel is the next generation of the company’s technology award-winning Monosteel piston and will aid vehicle and engine makers to further reduce fuel costs and enhance vehicle performance.
The company also introduced, during the third quarter, an innovative two-piece oil ring design for direct-injection gasoline engines for light-duty and passenger vehicles. The patented LKZ oil control ring was previously developed for more demanding diesel engine applications. The ring reduces oil consumption by up to 50 percent and friction by up to 15 percent, compared to the best conventional two-piece oil rings. The additional benefits of this improved engine performance are better fuel economy, CO2 reduction and longer oil life.
"Federal-Mogul’s drive for sustainable global profitable growth is based on the company’s market leadership in powertrain and vehicle safety technologies. Our products offer clear value in the area of greatest opportunity to vehicle makers experiencing even more rigorous demands to increase powertrain and vehicle efficiency. Our diverse product portfolio, customer differentiation and strong operating performance position the company to positively benefit from current industry trends," said Alapont.
For more information, visit the Federal-Mogul website.
