American Axle posts quarterly loss amid UAW strike

By Soyoung Kim

DETROIT (Reuters) - Auto parts supplier American Axle & Manufacturing Holdings Inc (AXL.N) posted a bigger-than- expected quarterly loss on Friday, hit by a strike at five U.S. plants, and it repeated threats to close the factories unless workers accept steep wage cuts.

American Axle shares fell 4.3 percent in midday trading.

About 3,650 employees represented by the United Auto Workers union went on strike at the plants in New York and Michigan on Feb. 26 after the union and the company failed to reach a new labor contract.

The company has said it must cut wages and benefits it says run three times higher than competitors, a demand which has been rejected by the UAW.

"While it would be tragic to dismantle American Axle's original U.S. manufacturing base, American Axle will be forced to consider additional restructuring and capacity rationalization actions if the UAW refuses to accept the changes needed to achieve market cost competitiveness at these facilities," Chief Executive Dick Dauch said in a statement.

Dauch added in a conference call that American Axle had no desire to shut the plants and was ready to invest $250 million to $300 million in the next four years if the union agreed to deep wage concessions.

"A lot of work still must be done to achieve an agreement through the collective bargaining process," he said.

American Axle reported a first-quarter loss of $27 million, or 52 cents per share, compared with year-earlier net income of $15.7 million, or 30 cents per share.

Excluding a one-time charge, the quarterly loss amounted to 48 cents per share, sharply wider than the 2 cent loss analysts polled by Reuters Estimates had expected.

JPMorgan analyst Himanshu Patel said the big miss suggested underlying earnings were still weak in a slumping market for trucks and big SUVs, apart from the impact of the strike.

Revenue fell 27 percent to $587.6 million.

American Axle estimated the eight-week-old strike had reduced revenue by $132.6 million and operating income by 56 cents per share.

Patel said in a research note that he maintained an "overweight" rating on American Axle despite the sluggish results, as he expected savings from a new union contract.

Customer production volumes for the full-size truck and SUV programs American Axle currently supports for General Motors Corp GM.N and Chrysler LLC fell about 31 percent in the quarter from a year earlier, the company said.

American Axle said the rest of the year would continue to be difficult amid rising gasoline prices, credit market instability and an accelerating market shift to smaller passenger cars.