Because of the restructuring of Federal-Mogul Corp.’s brake friction business and the charges that resulted, the auto parts supplier experienced a quarterly loss. Last June, the company said that it will restructure some of its facilities to lessen capacity. In the second quarter, it incurred an impairment charge of $119 million.
Federal-Mogul is controlled by activist investor Carl Icahn. It reported a net loss of $59 million, or 60 cents per share, attributable to the company. A year ago, it posted a profit of $64 million, or 64 cents per share. The company said that without the impairment charges, the net income would only have been $53 million in the quarter.
Based on these figures, the company earned 54 cents a share, said Thomson Reuters, which compares with the average profit expectation of 56 cents per share from two analysts. Its revenue for the quarter that ended June 30 declined by 6% to $1.7 billion, as it became affected by the decrease in the light vehicle production in Europe.
What analysts predicted was a revenue of $1.84 billion. Federal-Mogul said that its full-year revenue would benefit from the recent acquisition of BorgWarner Inc.'s spark plug business. The Champion spark plug brand is already owned by Federal-Mogul. The company said that these acquired units will contribute about $80 million annualized sales and raise Federal-Mogul's annual spark plug production capacity to more than 350 million annually.