Dana released its 2020 first quarter and Meritor its second quarter financial results last week.
Dana announced its sales for the first quarter of 2020 totaled $1.93 billion, compared with $2.16 billion in the same period of 2019. The company stated the decrease is primarily attributable to weaker demand in the heavy- vehicle markets in January and February of this year and the rapid reduction in production across all mobility markets in March as a result of the global response to the COVID-19 coronavirus pandemic. These declines were partially offset by the conversion of sales backlog and the benefit of recent acquisitions, the company says.
“The response to the global pandemic is presenting unprecedented challenges for Dana as well as our people, customers, suppliers, and communities,” says James Kamsickas, Dana chairman and CEO. “The rapid onset of containment measures and disruption to production schedules has challenged our organization like never before.
Dana reported net income of $38 million for the first quarter of 2020, compared with net income of $98 million in the same period of 2019. The company says the difference was primarily due to lower market demand and a goodwill impairment charge of $51 million arising from the negative effect of the COVID-19 pandemic. It was partially offset by discrete income tax benefits of $32 million, primarily resulting from recording additional U.S. deferred tax assets related to foreign tax credits, the company adds.
“I am very proud of how our people have responded and the decisive actions we have taken to protect our employees, communities, customers, and future,” says Kamsickas. “As we work toward bringing our operations back online, we will continue to take appropriate measures to ensure the safety of our people while also serving the needs of our customers.”
At Meritor, the company posted posted sales of $871 million in the second quarter, down $285 million, or approximately 25 percent, from the same period last year. The decrease in sales was driven by lower global production volumes, including changes in customer demand and the impact of government mandates as a result of COVID-19, partially offset by sales from the AxleTech business, which was acquired in the fourth quarter of fiscal year 2019, the company says.
“The COVID-19 pandemic has dramatically impacted the global commercial vehicle industry and economies around the world,” says Jay Craig, CEO and president. “I am confident that our financial position, strengthened by the cost containment actions we are implementing, will enable us to successfully navigate this challenging period. I want to share my appreciation for our teams around the world who have done extraordinary work under the conditions of an uncertain business environment. As a committed and connected global team, we expect to regain the momentum we had prior to this health crisis.”
Meritor’s adjusted EBITDA was $107 million, compared to $139 million in the second quarter of fiscal year 2019. Adjusted EBITDA margin for the second quarter of fiscal year 2020 was 12.3 percent, compared to 12.0 percent in the same period last year. The decrease in adjusted EBITDA year over year was driven primarily by lower revenue, partially offset by lower incentive compensation costs and lower material, labor and burden costs. The company says the incentive compensation was reduced $10 million in the quarter to align with revised performance expectations due to COVID-19.
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