For the fourth quarter of fiscal year 2007, ArvinMeritor posted sales of $1.6 billion, flat over the same period last year. Sales reflect the continued downturn in Class 8 North American truck sales offset by stronger volumes in other regions.
Operating income in the fourth quarter of 2007, before special items, was $8 million, compared to operating income, before special items, of $56 million in the prior year's fourth quarter.
Loss from continuing operations during the fourth quarter of fiscal year 2007, before special items, was $4 million, or $0.06 per diluted share, compared to income from continuing operations, before special items, of $29 million, or $0.41 per diluted share, a year ago. Fourth-quarter results reflect reduced North American volumes and significant premium costs associated with record European volumes.
Special items included costs associated with supplier reorganizations, restructuring expenses and certain non-recurring tax charges. Combined, these items accounted for approximately $0.26 per share of additional expense in the fourth quarter.
For the fourth quarter of 2007, ArvinMeritor reported positive free cash flow of $178 million.
"Despite the solid progress we are making in implementing our strategic initiatives, our results this quarter were negatively impacted by weaker than anticipated North American truck production and the continuing capacity challenges in our European truck operations," said Chairman, CEO and President Chip McClure. "Going forward, we believe European capacity issues will be less severe due to actions we are taking to implement lean manufacturing improvements and bring new suppliers into the pipeline.
"Following this period of extended softness in the North American truck market, we expect to see a rebound as the industry gradually returns in 2008. In Europe, we look forward to continued strong sales volumes, and in Asia and South America, we expect volumes to grow significantly." Accomplishments in the fourth fiscal quarter of 2007 include:
- Sourced as the supplier on the majority of the Mine Resistant Ambush Protected (MRAP) vehicles awarded thus far, with additional potential upside as new awards are announced.
- Entered into arrangement with Chery Motors in China that the company expects will ramp up to anticipated sales of $150 million annually by 2010.
- Announced closure of four additional manufacturing facilities in North America, as part of previously announced restructuring actions.
- Awarded new business to supply more than four million window regulator motors annually to Hyundai Motor Company worldwide.
The company's fiscal year 2008 forecast for light vehicle sales is 16 million vehicles in North America and 17 million vehicles in Western Europe. The company's light vehicle outlook is now based on expected sales volume, rather than production forecasts, as in the past.
ArvinMeritor's forecast for North American Class 8 truck production is in the range of 210,000 to 230,000 units in fiscal year 2008. The forecast for heavy and medium truck volumes in Western Europe is in the range of 530,000 to 540,000 units.
ArvinMeritor's 2008 sales are expected to be in the range of $6.8 billion to $7.0 billion, and full-year diluted earnings per share are expected to be in the range of $1.40 to $1.60. This guidance excludes gains or losses on divestitures, restructuring costs, and other special items, including any extended customer shutdowns or production interruptions.
"We are encouraged by our prospects for 2008," said McClure. "We anticipate that our Performance Plus initiatives, combined with the aggressive internal programs we have implemented to drive cost reductions, will help to mitigate the soft market conditions in the first half of fiscal year 2008. We are on track to generate $75 million in cost savings in 2008 and $150 million in annual cost savings by 2009."