American Axle & Manufacturing reported third-quarter net income of $22.6 million, a 36% decline versus the $38.7 million recorded one year ago, though the company’s net sales increased 4.8% in the recent period, $647.6 million versus $ 618.2 million. Earnings during the quarter were $24.8 million or $0.33 per share, compared to 3Q 2010 net earnings of $38.8 million or $0.52 per share.
Chairman and CEO Richard E. Dauch noted the third-quarter results had been "adversely impacted by the decision to close our Detroit Manufacturing Complex and Cheektowaga Manufacturing Facility.” Both operations will close early next year as a consequence of AAM’s inability to reach new labor agreements with the United Auto Workers union representing employees at those locations.
One-time charges of $11.9 million were reported in relation to the plant closings, and also include a $1.6 million asset-impairment recorded by the e-AAM joint venture with Saab Automobile AB. That project will design, develop, and supply electric all-wheel drive systems and electric/hybrid driveline systems.
More positively, AAM indicated “future annual sales” for the 2012-2014 period now total $1.1 billion, with new business launching during that period more than 15% higher than in the previous three-year (2011-2013) outlook. The company said its orders demonstrate successful efforts to expand its business globally and diversify its product portfolio, as well as by growing its customer base.
"AAM's sustained strong profit performance over the past two years is enabling us to accelerate the investment in advanced product, process and systems technology necessary to expand and diversify our customer base, product portfolio, and served markets,” Dauch stated. “As a result, we are on track to grow our annual sales to exceed $3 billion by 2013 while significantly improving our business diversification and balance sheet strength."
Notably, AAM said that 75% of the new programs it’s launching for the 2012-2014 period are for customers other than General Motors Corp. Historically, the company has been heavily reliant on GM for its business; it was founded in 1994 by investors who acquired GM’s Final Drive and Forge business unit. AAM has set a target of increasing non-GM sales to 40% of total sales by 2013, and 50% of total sales by 2015.
AAM said its new business includes programs for Chrysler Group and Fiat global vehicle platforms, Daimler Truck, Mercedes Benz, Mack Truck, Volvo Powertrain Group, Navistar, Mahindra Navistar Automotives Ltd., Tata Motors, Jaguar/Land Rover, Volkswagen, Audi, and Scania, among others.
The company also indicated about two-thirds of its 2012-2014 new business will be for passenger car, crossover vehicle, and commercial vehicle programs. And, more than 70% of the 2012-2014 new business is for programs sourced outside of North America.