Federal-Mogul Corp. dipped into the red in the fourth quarter of 2011 after a $304 million one-time impairment charge caused the automotive supplier to post a fourth quarter net loss of $239 million, or $2.42 a share. This was in sharp contrast to its fourth quarter results in 2010, when Federal-Mogul recorded a net profit of $45 million, or 45 cents a share.
The impairment charge was caused by a decrease in the value of some of the company’s product lines. The company meanwhile posted a five-percent hike in revenues to $1.7 billion. Setting aside one-time items, the company posted a 2011 fourth quarter profit of $51 million, or 51 cents per share, compared to its 2010 fourth quarter profit of $38 million, or 38 cents per share.
According to the company, the one-time impairment charge came from writing down the “goodwill” value of certain assets and could have been offset by increased values of other business units. However, accounting rules prevented the company from recognizing the gains in the value of one reporting unit to offset impairment charges in another reporting unit.
For the full year 2011, Federal-Mogul posted a net loss of $90 million compared to a net loss of $161 million in 2010. Again, the company said that setting aside one-time gain and charges, the company posted a $203 million net income in 2011 compared with $134 million in 2010.
Annual revenues continue to uplift the company, surging 11% to $6.9 billion. Federal-Mogul said its financial results reflected an increase in sales to original equipment customers and offset costs from higher volumes and raw materials. The company posted record sales in original equipment with $4.6 billion for 2011, an 18-percent hike from 2010.