UPDATE 4-American Axle sales view disappoints, shares drop

Fri Apr 30, 2010 1:02pm EDT

* Says Q1 EPS 22 cents include UAW-related charges

* Q1 revenue $521.9 mln, touch below Street estimate

* Revised 2010 revenue guidance below Street view

* Shares down 8.9 percent

(Adds CFO interview)

By Soyoung Kim

DETROIT, April 30 (Reuters) - American Axle & Manufacturing Holdings Inc (AXL.N) posted a quarterly profit on Friday aided by cost cuts and higher auto production, but disappointed Wall Street with a tepid 2010 sales outlook.

The auto parts supplier, whose shares fell nearly 9 percent, forecast full-year 2010 sales would rise at least 30 percent to a range of $2 billion to $2.1 billion, raising the bottom end of its previous $1.9 billion to $2.1 billion forecast.

Wall Street on average projects 2010 sales of $2.17 billion, according to Thomson Reuters I/B/E/S.

"I think it's a little bit early to be celebrating a very strong recovery in auto sales," Chief Financial Officer Mike Simonte told Reurters.

"Vehicle sales have been off to a reasonable start in 2010, but not as strong as what we're expecting for the rest of the year. We'd rather see a little bit more from the macro economics standpoint before we change our plan."

However, big cost cuts made during the wrenching industry downturn would allow American Axle to be "solidly profitable" this year, which would mark its first annual profit since 2007, Simonte said.

Over the past week, most U.S. auto suppliers, including Johnson Controls Inc (JCI.N) and BorgWarner Inc (BWA.N) reported quarterly profits that far exceeded Wall Street expectations. They also boosted their 2010 financial outlooks, benefiting from big cost cuts as U.S. auto sales rebound from their worst downturn in 27 years.

American Axle reported net income of $16.3 million, or 22 cents per share, compared with a year-earlier loss of $32.7 million, or 59 cents per share, which included a charge for workforce reductions.

Sales rose 30 percent to $521.9 million.

Analysts on average had expected American Axle to earn 22 cents per share on sales of $535.6 million, according to Thomson Reuters I/B/E/S.

Simonte said the first quarter results included a one-time charge related to benefits the company earlier agreed to pay its hourly workers represented by the United Auto Workers Union.

"If we were to adjust our Q1 results to exclude this item, our earnings would have been higher than the high end of the range of sell side estimates," Simonte said on a conference call with analysts.

Barclays Capital analyst Brian Johnson said the charge could have cost American Axle up to 6 cents per share in the first quarter.

Simonte added the company's financial outlook is based on U.S. auto sales of 11 million to 11.5 million units this year, about 500,000 lower than most industry estimates.

"We are happy to be conservative in our planning," Simonte said.

"To be clear, we can easily conceive of many reasonable scenarios ... in which the full year 2010 sales could exceed our current guidance. However, we would rather be cautiously optimistic and avoid making commitments to exceed our ability to deliver."

American Axle, which narrowly averted bankruptcy in September by amending credit agreements and winning financial aid from its top customer, General Motors Co [GM.UL], said it had more than $500 million in total available liquidity.

American Axle shares were down 8.9 percent at $10.70 in afternoon trading on the New York Stock Exchange. (Reporting by Soyoung Kim; Editing by Steve Orlofsky and Derek Caney)

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