Falling commercial vehicle demand in North America and persisting weakness and uncertainty in international markets combined to drag down Dana Holding Corp.’s third-quarter sales and led the company’s chief executive officer to call for continued belt-tightening in a letter to employees.
The Mamuee automotive parts giant reported third-quarter sales fell $225 million, or 12 percent, to $1.7 billion. About 40 percent of Dana’s business comes from heavy commercial vehicles. Dana said North American production in that sector fell sharply in the third quarter. Officials expect it to be down in the fourth quarter too. In addition to weak demand, Dana said unfavorable currency exchange rates lowered sales dollars.
The company’s quarterly earnings fell by more than half, though Dana said some of that drop was because of a onetime $60 million gain last year on the sale of investments. For the third quarter, Dana said it earned $48 million, or 26 cents a share. Last year, the company reported profits of $102 million, or 53 cents a share.
In a letter to employees Friday, Roger Wood, Dana’s president and chief executive officer, addressed what he described as “looming concern” in the U.S. economy.
“The threats of a fiscal cliff, along with increasing taxes on small businesses, are holding down job creation and optimism for growth in the United States,” the letter said. “These economic factors affect Dana in that we must always be sure that we are keeping our costs in line with our revenue changes.”
Mr. Wood also said the company must find a way to offset an estimated additional $24 million that the health-care reform law, often called “Obamacare,” will cost Dana in coming years. Jeff Cole, Dana’s director of corporate communications, said the letter wasn’t aimed to be about politics, but the issues Dana faces. “The fact is, it’s not about taking sides,” he said. “Obamacare is the law of the land and we’re anticipating at least $24 million in additional health-care costs in the U.S. over the next six years because of that. That is a cost we have to make up for through our overhead expenses.”
Mr. Cole said seven corporate jobs in the Toledo area were eliminated Friday. Since the second quarter, Dana has cut its global force by about 1,000 workers to 24,500. Most losses were in the United States, including previously announced layoffs in Milwaukee; Henderson, Ky.; Fredericktown, Ohio, and in Toledo at a plant that made parts for the Jeep Liberty.
The company cut its full-year sales projection to $7.2 billion to $7.3 billion; previously, Dana had said it expected sales of $7.5 billion to $7.6 billion. Dana posted sales of $7.6 billion last year. Dana also declared a 5-cent-per-share fourth-quarter dividend, payable Nov. 30 to holders of record on Nov. 9, and announced a share repurchase program for up to $250 million worth of outstanding shares.
Contact Tyrel Linkhorn at: email@example.com or 419-724-6134.
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