Federal
Mogul set to exit Chapter 11' showing a profit...Federal Mogul set to exit Chapter 11'
showing a profit
Chapter 11 Automotive PM parts maker
Federal Mogul is set to exit bankruptcy this autumn as a
profitable going concern. If the US Bankruptcy Court accepts
plans put forward in July at a resumed hearing in October,
the way will be open for a restoration of normal business.
In the UK Federal Mogul was released from Administration
last November after the company entered Company Voluntary
Arrangements covering provisions for litigation.
The Southfields, Michigan-based company was forced to seek
Chapter 11 cover in October 2001 when it became clear that it
was facing a multi-billion dollar liability for asbestos-related
injuries.
Federal-Mogul has turned loss to profit in the first half of the year. It reported net income of $4 million for the quarter ended June 30, 2007, compared to a net loss of $17 million for the second quarter of 2006. For the six months ended June 30, 2007, the company reported net income of $9 million, compared to a net loss of $85 million for the comparable period of 2006. These results reflect an 8 per cent increase in sales, improved gross margin and reduced selling, general and administrative expenses.
The sales picture is brighter with net sales of $1,763 million for the quarter ended June 30, 2007, an increase of $131 million, or 8 per cent, compared to the second quarter of 2006. The most significant factors impacting sales were increased volumes of $77 million and favourable foreign currency movements of $56 million. For the six-month period ended June 30, 2007, net sales increased by $248 million to $3,480 million, of which $119 million was due to increased volumes, $51 million due to the May 2006 acquisition of Federal-Mogul Goetze India (“FMG”) and $116 million is due to favourable foreign currency movements. These positive impacts were partially offset by customer pricing.
Selling, general and administrative (SG&A) expense for the three and six months ended June 30 improved by $5 million and $26 million, respectively, when compared to the comparable periods of 2006. Reductions in SG&A resulted from a combination of cost reduction actions in excess of labour and benefits inflation, and the settlement of the UK pension plans. These favourable impacts were partially offset by increased SG&A from the acquisition of FMG and adverse foreign currency movements. “Federal-Mogul remains fully committed to exiting from Chapter 11, while wholly dedicated to our strategy for sustainable global profitable growth, providing our customers with service excellence, quality products, leading technology and innovation at competitive cost,” said chairman, president and CEO José Maria Alapont. “The results achieved during the first half of 2007 reflect the Company's commitment to consistently improve our operational performance.”
Federal-Mogul has turned loss to profit in the first half of the year. It reported net income of $4 million for the quarter ended June 30, 2007, compared to a net loss of $17 million for the second quarter of 2006. For the six months ended June 30, 2007, the company reported net income of $9 million, compared to a net loss of $85 million for the comparable period of 2006. These results reflect an 8 per cent increase in sales, improved gross margin and reduced selling, general and administrative expenses.
The sales picture is brighter with net sales of $1,763 million for the quarter ended June 30, 2007, an increase of $131 million, or 8 per cent, compared to the second quarter of 2006. The most significant factors impacting sales were increased volumes of $77 million and favourable foreign currency movements of $56 million. For the six-month period ended June 30, 2007, net sales increased by $248 million to $3,480 million, of which $119 million was due to increased volumes, $51 million due to the May 2006 acquisition of Federal-Mogul Goetze India (“FMG”) and $116 million is due to favourable foreign currency movements. These positive impacts were partially offset by customer pricing.
Selling, general and administrative (SG&A) expense for the three and six months ended June 30 improved by $5 million and $26 million, respectively, when compared to the comparable periods of 2006. Reductions in SG&A resulted from a combination of cost reduction actions in excess of labour and benefits inflation, and the settlement of the UK pension plans. These favourable impacts were partially offset by increased SG&A from the acquisition of FMG and adverse foreign currency movements. “Federal-Mogul remains fully committed to exiting from Chapter 11, while wholly dedicated to our strategy for sustainable global profitable growth, providing our customers with service excellence, quality products, leading technology and innovation at competitive cost,” said chairman, president and CEO José Maria Alapont. “The results achieved during the first half of 2007 reflect the Company's commitment to consistently improve our operational performance.”
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