ArvinMeritor, Inc. today reported record sales of $2.4 billion and net income of $53 million, or $0.77 per diluted share, for its third fiscal quarter ended June 30, compared to the prior fiscal year's third-quarter net income of $47 million, or $0.69 per diluted share.
Sales increased $279 million, or 13 percent, from the prior year's third quarter. On a constant currency basis, sales would have been up approximately 10 percent on stronger North American commercial vehicle truck and trailer volumes and new business awards in the Light Vehicle Systems business. Net income in the quarter increased 13 percent from a year ago, despite higher raw material costs, primarily steel of approximately $18 million, after tax. Operating income for the quarter was $102 million, a five-percent improvement compared to the same period last year.
ArvinMeritor Chairman and Chief Executive Officer Larry Yost said, "We are pleased to report a substantial improvement in sales and net income, compared to the same period last year. This improvement was driven by our Commercial Vehicle Systems business group, which continued to benefit from stronger North American Class 8 truck and trailer volumes."
Specific business segment financial results include:
* Light Vehicle Systems (LVS) sales were $1,250 million, up $55 million, or five percent, from the third quarter of fiscal year 2003. Excluding the effect of currency and dispositions, LVS sales would have been higher by approximately six percent. Operating income of $38 million was down $8 million from the same period last year, and was unfavorably impacted by $10 million of higher steel costs. Operating margin was 3.0 percent, down from 3.8 percent in the prior year.
* Commercial Vehicle Systems (CVS) sales were $862 million, up $217 million, or 34 percent, from last year's third quarter, primarily as a result of stronger North American commercial vehicle truck and trailer volumes. Excluding the effect of currency, sales would have been up approximately 32 percent. Operating income was $53 million, $15 million higher than the same period last year, resulting in operating margins of 6.1 percent, up from 5.9 percent in the prior year. Operating margins increased, despite higher steel costs of approximately $10 million, investments in commercial vehicle exhaust technology and the consolidation of the transmission business after the dissolution of the transmission joint venture with ZF Friedrichshafen.
During the third quarter, CVS completed the sale of its Kenton, Ohio, trailer-beam fabrication facility, continuing the company's strategy to divest non-core businesses and improve return on invested capital.
* Light Vehicle Aftermarket (LVA) sales were $224 million, nearly flat compared to last year's third quarter. On a constant currency basis, sales would have been lower than the prior year by approximately three percent. Operating income was $4 million during the quarter, down $6 million, when compared to the same period a year ago. Weaker European markets and $5 million in higher steel costs accounted for the operating income decline.
"We have lowered our fiscal year 2004 outlook for light vehicle production to 15.9 million vehicles in North America, slightly down from our previous estimate of 16.1 million vehicles, while holding the forecast for Western Europe at 16.6 million vehicles," Yost said. "We are increasing our Class 8 truck production outlook in North America to 234,000 units, up from our previous estimate of 227,000 units.
"We expect to achieve record sales of $9.1 billion for our full fiscal year, based on strong North American heavy-duty truck and trailer volumes," Yost continued. "While we believe our CVS business group will benefit from these higher volumes, in the fourth quarter we will face challenges posed by the availability and higher prices of steel. We expect fourth-quarter diluted earnings per share in the range of $0.55 to $0.60, and full-year earnings between $2.20 to $2.25.”