ANN ARBOR, Mich. — Affinia Group has reported its financial results for the first quarter ended March 31.
The company said improving market conditions, along with increased sales to new and existing customers and favorable currency effects, contributed to net sales of $505 million, a 14 percent increase compared to same period in 2010.
Sales in chassis products increased by $23 million, a 64 percent improvement over the same period in 2010, as a result of new business wins with new and existing customers. Brake North America and Asia product sales increased by $14 million, or 11 percent, compared with the same period in 2010, due to improved market conditions, increased sales to new and existing customers and favorable currency translation effects. Commercial Distribution South America product sales improved by $12 million, or 12 percent, with the company’s Brazilian distribution operations accounting for most of the sales increase. Filtration product sales increased by $11 million, a 6 percent improvement over the prior year, of which $9 million was attributable to an increase in sales at the company’s Polish, Russian and Venezuelan operations. Of the total $62 million increase in sales, $13 million was a result of a weaker U.S. dollar in the first quarter of 2011, as compared with the first quarter of 2010.
Gross profit for the quarter increased to $93 million compared with $90 million in the first quarter of 2010, although gross profit margin decreased to 18 percent as compared with 20 percent in the same period in 2010. The decrease in gross margin related to increases in operating and freight costs related to the increasing cost of fuel and energy during the first quarter of 2011.
Selling, general and administrative expenses were $71 million for the quarter, an increase of $4 million compared with the same period in 2010. The increase was predominantly attributable to increased advertising expense driven by the higher level of sales the company experienced in the first quarter of 2011.
Affinia’s net income from continuing operations in the first quarter of 2011 was $3 million, a $3 million decrease as compared to the same period in the prior year. The decrease in net income from continuing operations resulted largely from the reduced gross margin and a higher selling, general and administrative expense. Adjusted for discontinued operations and non-controlling interest, net income attributable to the company was $2 million compared with $6 million in the first quarter of 2010.
“Our ongoing focus on growing revenues through new business wins is on track, as evidenced by our continued improvement in our top line. Increasing input costs, specifically certain commodities and freight, are having an effect on our margins. However, as long as we keep our customers competitive, we have historically been able to mitigate the long-term impact of volatile commodity prices on our financial results. Favorable currency exchange rates have also had an impact on our financial performance, and although movement in exchange rates will always remain a factor on our financial results, given our global footprint, our sales are growing materially even when adjusted for currency,” said Tom Madden, Affinia’s senior VP and CFO.
Total debt outstanding as of March 31, was $742 million, compared with $696 million at year end Dec. 31, 2010. As of March 31, the company had $55 million of cash and cash equivalents and $14 million of restricted cash. Cash from operations resulted in a use of cash of $31 million for the quarter, compared to a use of cash of $39 million in the same period in 2010.
