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Federal-Mogul Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: FDML

With having said this, on Page 7, we move into an overview about Federal-Mogul in quarter 2 of this year. We had sales of $1.7 billion, that is around 1% growth in constant dollars. So OE sales was $1.1 billion, was up 3% based especially on the strong demand of our OE customers here in the U.S. The U.S. sales, in particular, was up by 9%. The sales in our operations in the BRIC countries, Brazil, Russia, India, China, and similar, were up 7%. Unfortunately, the European markets, sales declined by 4%, but we see our position still strengthening as the market in Europe move to faster downturns in our fields.

So global aftermarket in quarter 2 was impacted, especially in the U.S., with mild winter. The mild winter requires less replacement for our wiper business -- wiper blades and also, for some of our chassis components, and we see, similar to the OE business, a softer market in Europe, but solid growth in the rest of the world.

Federal-Mogul had to report, in quarter 2, a $59 million net loss. This includes $100 million noncash impairment charge, primarily due to our brake friction business intangible assets. EBITDA was $159 million. That is heavily impacted not only by volume in Europe, but also by negative currency.

And especially the weakness of the European market and its currency is hurting today, but the weak euro, in the long run, will potentially help us to boost export out of Europe and definitely our customers in the OE, car manufacturer, truck manufacturer and engine producers in Europe will benefit from the weak euro currency with a solid position for export markets. We are well positioned as a company to participate on this as we have -- with all major OEMs in Europe who are exporting into China and into the U.S. and into other markets, we have a strong position with them.

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