Federal-Mogul returns to 2Q profit after cost cuts

Cost cuts, higher volumes help auto parts supplier Federal-Mogul return to 2Q profit

Associated Press

SOUTHFIELD, Mich. (AP) -- Federal-Mogul Corp. returned to a second-quarter profit as the auto parts supplier cut costs and said that a more stable market lifted sales.

The company, whose sales have declined amid a weak European economy, said on Monday that it's seeing "some encouraging signs of European market stabilization" in the powertrain business and market share gains for its vehicle parts unit. Shares jumped nearly 15 percent in morning trading.

In the three months through June 30, profit amounted to $56 million, or 57 cents per share, compared with a loss of $59 million, or 60 cents per share, in the same quarter of 2012.

Federal-Mogul has been working to eliminate unprofitable divisions over the past year. Last July, it announced plans to close or downsize some of its brake friction and wiper manufacturing plants. The year-ago period's results included $119 million in one-time charges, mostly from writing down the value of the brake friction business.

In the most recent quarter, Federal-Mogul said the market environment has become "more stable." Revenue rose 6 percent, to $1.77 billion from $1.68 billion, as volumes increased. Sales in the powertrain unit rose 5 percent to $1.1 billion, while vehicle components revenue increased 5 percent to $783 million.

Shares of Southfield, Mich.-based Federal-Mogul Corp. rose $1.57 to $12.25 in morning trading. The stock had gained 33 percent this year and more than doubled in the past three months.

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