With only three weeks on the job as chief executive, Frank Macher had the unenviable task of confirming for auto industry analysts and journalists that Federal-Mogul Corp., already a company in trouble, had a fourth quarter that was even worse than expected.
The Southfield, MI, supplier lost $337 million in the fourth quarter, or 99 cents per share. Initially, the company projected losses of $0.25 per share, raising it to $0.50 in early January. Factor in restructuring charges and asbestos liability adjustments, and fourth-quarter losses reach a staggering $4.80 per share, compared to net earnings of $0.79 in like-1999.
Sales were down 14% to $1.3 billion from fourth-quarter 1999 and off 7% for the year to $6 billion, as the company lost $281 million for entire-1999.
The outlook doesn't improve much for 2001. It will be a very difficult year for us with volume reductions, Mr. Macher says. We will work aggressively on the cost side to improve cash flow, and we've already begun to work down our asbestos liability to the extent we can. Given the circumstances, we don't expect positive cash flow this year. He says more restructuring also will come this year.
Besides asbestos liability, which totaled $338 million in 2000, Federal-Mogul attributes its troubles to a weak replacement parts market, a struggling heavy-truck market and the Euro.
It forecasts lower North American vehicle production of 15.4 million units for 2001, with inventories being reduced by an estimated 700,000 units.
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