(Rewrites throughout, updates with analyst comments, stock activity)
By Susan Kelly
CHICAGO, April 23 (Reuters) - Auto parts maker ArvinMeritor Inc. on Wednesday said its quarterly profit fell 31 percent, hurt by higher steel costs, pricing pressure from automakers, and soft demand for replacement components.
"Overall, the quarter was disappointing, except for (commercial vehicle systems)," Merrill Lynch analyst John Casesa, who rates the stock "neutral," said in a research report.
Although profit declined, it beat the consensus analysts' forecast which helped boost ArvinMeritor's stock by 5 percent, analysts said.
ArvinMeritor, which supplies both the truck and auto markets, said its commercial vehicle systems group benefited from stronger North American heavy-duty truck and trailer production.
But the company said demand is softening across its other businesses, and it lowered its full-year earnings forecast in anticipation of lower North American light vehicle production this year.
ArvinMeritor said it will continue to aggressively cut costs and reduce its work force to offset slower demand, higher raw materials prices and continued pricing pressures from vehicle manufacturers.
The company, whose products include truck axles, brakes and transmissions and automotive exhaust and suspension systems, said it earned $24 million, or 36 cents a share, in its fiscal second quarter ended March 31. That's down from $35 million, or 52 cents a share, in the same period a year ago.
Analysts had expected a profit of 34 cents a share in the latest quarter, with estimates ranging from 33 cents to 36 cents, according to Thomson First Call.
In March, the Troy, Michigan-based company cut its second-quarter earnings forecast for a second time, to a range of 33 cents to 36 cents per share.
Sales rose 18 percent to $1.99 billion, boosted by an acquisition and the stronger euro. Excluding added sales of $198 million from the purchase of the remaining 51-percent interest in Zeuna Starker GmbH & Co., a German joint venture dealing in auto emissions technology, and the favorable currency translation, sales were essentially flat, the company said.
ArvinMeritor said restructuring costs reduced earnings in the latest quarter by $11 million, or 10 cents a share.
The company forecast 2003 earnings in a range of $2.00 to $2.10 a share, down from a prior forecast of $2.50 to $2.70, on projected sales of $7.7 billion. Third-quarter earnings were forecast at 67 cents to 72 cents a share, with sales pegged at $2.1 billion.
Analysts had expected full-year 2003 earnings of $2.05 a share and a third-quarter profit of 62 cents.
Shares of ArvinMeritor, which are down 5 percent for the year to date, rose 78 cents, or 5.2 percent, to $15.83 in morning trading on the New York Stock Exchange.