Dana’s Second Quarter Drops, Aftermarket Group Called “Most Encouraging”

Dana Corporation has announced that its sales for the second quarter of 2001 were $2.8 billion U.S. down from $3.3 billion U.S. for the same period last year, but its Automotive Aftermarket Group registered improved performance.
Net income, excluding non-recurring items, totaled $26 million, or 17 cents per share for the quarter, compared with $154 million, or $1.01 per share, during the second quarter of 2000. Net income for the quarter, including non-recurring items, totaled $14 million, or 10 cents per share. This compares with net income of $145 million, or 95 cents per share, in the second quarter of 2000. All figures in U.S. dollars.
Dana’s six-month consolidated sales were $5.5 billion, down from $6.8 billion over the same period last year. Net income, excluding non- recurring items over the period, was $27 million, or 18 cents per share, compared with $315 million, or $2.01 per share, in 2000. After net, non- recurring charges, the company incurred a net loss of $13 million, or 8 cents per share, during the first six months of 2001. This compares with net income of $390 million, or $2.50 per share in 2000, which included net, non-recurring income of $75 million, or 49 cents per share.
"The second quarter was another challenging period for our industry, which is well below last year’s strong pace," said Dana chairman and CEO Joe Magliochetti. "Nevertheless, we were pleased to see the improvement in our results from the first quarter to second quarter in a number of areas.
"Despite erratic light vehicle production schedules, our largest business unit, the Automotive Systems Group, showed a marked improvement in profitability reflecting the success of our cost reduction actions and workforce reductions," he said.
"Similarly, our Commercial Vehicle Systems unit grew its profits, despite lower sales to the heavy truck market," he added. "And perhaps most encouraging was the improved performance of our Automotive Aftermarket Group, which is significant considering the number of challenges it has faced over the past year.
"Looking ahead to the second half of 2001, we expect to continue benefiting from our rightsizing efforts. However, we’re less optimistic today about the rate of recovery in the North American OE markets than we were at the outset of the year," Magliochetti said. "Certain new vehicle inventory levels remain high and several major customers have announced extended summer production shutdowns. This will have a continuing impact on the industry during the third quarter, but we are encouraged by the present outlook for the fourth quarter."
Dana chief financial officer Bob Richter said, "In addition to our cost reduction measures, we continued our focus on managing for cash, as evidenced by further reductions in inventory levels and continued progress in our divestiture program."
During the second quarter, Dana divested three operations resulting in a one-time, net after-tax charge of $8 million, or 6 cents per share. These operations include the company’s Marion, Ohio, forging facility; and the assets of its Dallas, Texas, and Washington, Mo., Fluid Systems operations.
Yesterday, Dana completed the sale of its Chelsea Power Take-Off business to Parker Hannifin Corporation. As a result of the sale, Dana will record a one-time, after-tax gain of approximately $20 million, or 13 cents per share, in the third quarter of 2001.
"As we’ve said previously, we will use proceeds from divestitures and other positive cash flow to reduce debt," Mr. Richter said. "However, we will also explore ways to better balance the maturity of our debt portfolio and reduce our exposure to fluctuations in the euro-dollar exchange rate."