New York: With global auto production still in a slump and two of the US automakers in bankruptcy protection, it wasn’t a big surprise that the second quarter was another tough one for auto suppliers.
But at the same time, the losses almost seemed trite considering that at least two major suppliers have filed for bankruptcy protection in recent months, blaming the continued industry downturn.
Richard E. Dauch, American Axle & Manufacturing Holdings Inc.’s co-founder, chairman and CEO, told analysts on Wednesday that 2009 continues to be a most difficult and challenging year for his company and the entire auto industry.
“On top of rising unemployment, weak consumer confidence and higher raw material costs, the unprecedented bankruptcy protection filings at General Motors (GM) and Chrysler were devastating to the suppliers,” he said.
Detroit-based American Axle, which still derives the vast majority of its revenue from sales to GM, on Wednesday said that it posted a loss of $288.6 million for the second quarter and saw its sales drop by nearly half to $245.6 million.
The company said that it lost about $203.6 million in sales during the period as a result of the drawn-out shutdowns at GM and Chrysler.
Industry observers have speculated that American Axle could be the next to follow in the footsteps of Visteon Corp. and Lear Corp., along with privately held Cooper-Standard Holdings Inc., and file for bankruptcy. But the company recently negotiated an extension on the waiver of its revolving credit facility to 20 August.
In addition, American Axle said that it has sped up its efforts to cut costs and capacity in order to bring itself more in line with demand, while also working to diversify its product and customer bases.
“We believe bankruptcy is far too extreme and far too destructive for our company and our shareholders,” Dauch said.
Dauch said that completing its restructuring outside of bankruptcy protection remains American Axle’s top goal, but added that there are no guarantees.
Others weren’t optimistic. Kip Penniman Jr., an analyst for KDP Investment Advisors, said that in a blog entry Wednesday that he still thinks that the company will be unable to make an August payment on its senior notes and is in the midst of negotiating a prepackaged bankruptcy protection filing with its lenders.
Other companies managed to do better than Wall Street expected despite posting substantial losses.
TRW Automotive Holdings Corp. on Tuesday reported a second-quarter loss of $11 million, or 11 cents per share, well below average analysts’ predictions for a loss of 83 cents per share.
The Livonia, Michigan-based company reached a deal during the quarter with its secured lenders to access more than $1 billion in liquidity and help it ride out the industry downturn.
Also on Tuesday, ArvinMeritor Inc., which makes truck axles, brakes and transmissions, said it posted a $162 million loss Tuesday for its fiscal third quarter but beat Wall Street predictions.
The Troy, Michigan-based company added that it still expects to be in compliance with debt agreements next month and plans to sell its wheels business to a Brazilian company for $180 million.