Dana loses nearly $1.3B

[Variance]

Auto parts maker's shares tumble 20% as continuing slump in industry takes its toll.

Detroit News wire services /

TOLEDO -- Auto parts maker Dana Corp. on Tuesday reported a third-quarter loss of nearly $1.3 billion as a slumping automobile industry forced it to realign its business, triggering massive charges during the period. Its shares tumbled more than 20 percent.

The company, which makes brakes, axles and other parts, reported a loss of $1.27 billion, or $8.50 per share, for the three months ended Sept. 30 compared with a profit of $42 million, or 28 cents per share, a year earlier. Sales edged higher to $2.4 billion from $2.11 billion last year.

"Obviously, our results are far from acceptable, particularly the operating loss," Chairman and CEO Mike Burns said in a statement. "Many of the challenges we are facing on the automotive side, including higher material costs and lower production levels, are industrywide issues."

The company said in October that it was delaying the release of the statement as it worked to restate previous earnings reports because of improper accounting.

Higher energy and steel costs, coupled with woes at America's two biggest automobile makers, have caused problems for U.S. companies that produce products used in car manufacturing. Dana late last year unveiled a plan to reposition its business to brace for a decline in the industry.

Those changes caused more than $1 billion worth of charges and allowances during the quarter, cutting into the company's bottom line. Among them was a valuation allowance announced on Oct. 10 that reduced net income by $918 million. The divestiture of businesses Dana deemed as "noncore" caused an impairment charge of $275 million.

Dana also posted a charge of $16 million, or 11 cents per share, related to the sale of its domestic fuel rail business and the dissolution of its engine bearings joint venture.

Excluding those charges, Dana said its loss from operations was $63 million -- compared with a $39 million profit last year after adjusting for unusual charges and results of discontinued operations.

"We expect the company's near-term recovery prospects to be poor given the scale of requisite operational fixes, a tough North American operating environment, volume pressures at Ford, where Dana is highly exposed, and management's poor execution record," Goldman Sachs analyst Robert Barry said in a research note.

Last year, Dana cut its profit outlook for 2005 in half, blaming soaring energy and steel costs. That prompted the company to announce plans to cut 5 percent of its salaried jobs and shrink its 46,000 global work force by 23 percent to cut costs. The company has closed plants in the U.S. and Australia while starting production in lower-cost countries such as Hungary.

The company two weeks ago cut profits by $44 million for a period starting in 2000 and ending in June in adjusted reports to the Securities and Exchange Commission. It said the changes were due to improper accounting for customer pricing increases and supplier reimbursements in its commercial unit.

Dana shares fell $1.40, or 21 percent, to close at $5.40 Tuesday on the New York Stock Exchange.

Link: http://www.detnews.com/apps/pbcs.dll/artic.../601180349/1148

[capriceman]

Remeber my crazy idea of the trickle down affect? O look what happened........

[balthazar]

whoa- waitaminnit, toyota & nissan are building all these big honking trucks here now, employing all these millions of workers, pouring quadrillions of dollars into suppliers and local economies monthly, yee-haw for 'merica!; how could one of the world's best axle makers be citing a downturn for demand? Aren't toyota and nissan using American parts like we're all told they are? Hm-mmm.....

[pow]

whoa- waitaminnit, toyota & nissan are building all these big honking trucks here now, employing all these millions of workers, pouring quadrillions of dollars into suppliers and local economies monthly, yee-haw for 'merica!; how could one of the world's best axle makers be citing a downturn for demand? Aren't toyota and nissan using American parts like we're all told they are? Hm-mmm.....

The Titan uses Dana axles... not sure about the Tundra.

Dana Corp. said that it will supply front- and rear-axle assemblies and propshafts for Nissan's all new 2004 Titan full-size pickup truck. The new Nissan vehicle, which will be styled, engineered, and assembled in the United States, will be introduced in late 2003.

"We are extremely excited by this new opportunity to employ our torque and traction technology expertise on the behalf of Nissan," said Dana Chairman and CEO Joe Magliochetti. "This important program also adds to the solid growth Dana is experiencing with overseas manufacturers with U.S. operations."

Along with Dana's torque and traction technologies, the new Nissan pickup will offer truck owners a package that features a large V-8 engine, a completely new platform, and increased horsepower, payload, and towing capacity.

Axle production is expected to begin in mid 2003. The lightweight, aluminum, independent front axle assemblies and cast-iron, beam rear axle assemblies will incorporate several Dana-first innovations, including: Optional rear electrical locking differential for improved traction; Improved pinion sealing technology to prevent contamination; Advanced gear manufacturing for improved strength; life expectancy and noise; vibration, and harshness (NVH); Industry-first, one-piece die cast carrier for increased axle strength; and Advanced oil flow design, which improves towing capabilities and vehicle maneuverability.

Dana will also produce steel and aluminum propshafts for both 4x4 and 4x2 models. All assemblies include maintenance-free universal joints.

http://www.findarticles.com/p/articles/mi_..._16/ai_96575347

Perhaps if Americans bought more Titans this wouldn't have happened... :AH-HA_wink:

[balthazar]

That low of a volume ain't helping anything.

I have a HD Dana 60 in my Buick....

[Newbiewar]

whoa- waitaminnit, toyota & nissan are building all these big honking trucks here now, employing all these millions of workers, pouring quadrillions of dollars into suppliers and local economies monthly, yee-haw for 'merica!; how could one of the world's best axle makers be citing a downturn for demand? Aren't toyota and nissan using American parts like we're all told they are? Hm-mmm.....

haha i dont know about the millions of workers...

Toyota only employees about 37k... and a majority of those are in mexico...

[balthazar]

Oh no, newbiewar- toyota themselves say the number is 400,000...

[Newbiewar]

Oh no, newbiewar- toyota themselves say the number is 400,000...

nono... they said on their website in NA they only employee 37k...

[Dragon]

The Titan uses Dana axles... not sure about the Tundra.

Dana is also making the current and next generation frames of the Sequoia.