3 Min Read
(Reuters) - U.S. auto parts supplier American Axle and Manufacturing Holdings Inc (AXL.N) reported sharply lower quarterly earnings, hurt by costs related to the closing of plants in Michigan and New York.
Net income fell to $4.7 million, or 6 cents per share, from $49.2 million, or 65 cents per share, a year earlier. Revenue rose 7.8 percent to $739.8 million.
The company took charges and restructuring costs of $36.5 million, or 49 cents per share, related to closing plants in Detroit and Cheektowaga, New York.
Restructuring costs are largely in the past, Chief Financial Officer Mike Simonte said in an interview. Only a small amount of continuing costs related to the plant closings will be shown in subsequent quarters, he said.
For new programs launching from 2012 to 2014, American Axle expects $1.2 billion in new business, Simonte said.
Gross margins for the first half of 2012 fell to 15.1 percent from 18.5 percent a year earlier, and operating margins fell to 7.2 percent from 9.8 percent.
Simonte said American Axle had warned about the dip in gross and operating margins, related to higher material costs for steel and other components such as bearings, tubes and castings.
American Axle, based in Detroit, relies on General Motors Co (GM.N) for 70 percent of its business. American Axle was co-founded by its chief executive, Richard E. Dauch, who led an investment group that bought GM's axle plants.
New business will allow American Axle to drop its reliance on GM to 50 percent by 2015, Simonte said. Currently, Chrysler is its second-biggest customer, accounting for just under 10 percent of sales.
Sales to non-GM customers rose 9 percent in the second quarter.
The North American market accounts for about 90 percent of its business, but Simonte said the company is diversifying and will spend a total of $250 million on facilities in Brazil, Thailand, China and India in 2012.
American Axle shares were up 1.8 percent at $10.57 in afternoon trading. The shares are up 7 percent this year.
Reporting By Paul Lienert and Bernie Woodall in Detroit; editing by John Wallace