Dustin Walsh, Crain News Service
SOUTHFIELD, Mich. (Oct. 22, 2014) — Automotive parts and systems supplier Federal-Mogul Holdings Corp. reported a third-quarter net loss Oct. 22 because of restructuring and relocation costs.
The suburban Detroit supplier reported a loss of $18 million on revenue of $1.87 billion in its third quarter, which ended Sept. 30, compared with net income of $38 million in revenue of $1.69 billion during the same quarter in 2013.
The loss reflects a $25 million restructuring charge as part of the Southfield-based firm's plan to split into two separate publicly traded companies by the first half of next year, the company said in a press release. The result will be Federal-Mogul Holdings, supplying powertrain components to the automotive industry, and Federal-Mogul Motorparts, which will supply aftermarket parts such as its Champion spark plugs, Wagner brake products, ANCO wiper blades and other components.
Federal-Mogul's earnings were also dented by a $12 million charge related to its $385 million acquisition of the engine valve business of TRW Automotive Holdings Corp. That deal is expected to close in the first quarter of 2015. It also began its move to a smaller headquarters in the Detroit region.
The supplier's powertrain division reported revenue of $1.1 billion in the third quarter, up 5 percent from the same quarter last year. Division revenue increased 7 percent in North America, 4 percent in Europe and 11 percent elsewhere.
Its aftermarket division has struggled in years past, but revenue for the quarter increased 17 percent to $859 million thanks to business from its acquisitions of Affinia's chassis business and the brake component business of Honeywell. Without the boost of those business lines, revenue decreased 3 percent in the quarter, the company said.
“Integration of the recently acquired Affinia chassis and Honeywell brake component businesses are underway and proceeding smoothly, and we are actively pursuing other growth opportunities in emerging markets and through expansion into complementary product lines,” said Daniel Ninivaggi, Federal-Mogul Co-CEO and CEO of its Motorparts division.
“It is my strong belief that these investments will make Federal-Mogul Motorparts a stronger company and allow us to provide greater value to our channel partners and end-customers.”
This report appeared in Crain's Detroit Business magazine, a sister publication of Tire Business.