As it announced record third-quarter sales and operating profits up 27% for the quarter, Dana Corp. is continuing with restructuring plans, including closing 14 plants and 29 distribution centers, to pare costs in response to "softness" in key industrial and off-highway markets in Europe.
Earlier this week, Dana announced record third-quarter sales of $3.1 billion, an increase of nearly 6% over the same period last year. Operating profits after tax rose 27% to $172 million. For the first nine months of the year, sales are up 5% over last year, and operating income is up 21% over last year.
"This was another good quarter for us in terms of sales volume, net income, and earnings per share, despite challenging conditions internationally," said Dana Chairman Southwood Morcott.
Strong light, medium- and heavy-duty truck markets in North America put growth up 10% in Dana's Heavy Truck Group and 6% in the Automotive Systems Group.
Joe Magliochetti, Dana president and CEO, said in addition to the softness in Europe, "we had planned on a recovery in South America by now, which has yet to materialize. Europe and South America account for about 20% of our revenue year-to-date but have delivered less than 8% of our net profit - which is well below expectations." The strong North American market has made up for profit shortfalls internationally, he said.
However, Dana believes that production may be weakening in North America. "We have to be prepared to take quick, decisive action," Magliochetti said. "As a result, we are evaluating a number of alternatives aimed at rationalizing our global operations to be more efficient in the future."
Dana is working on these efficiencies with what it calls its Five-Point Plan. It is divesting in "non-strategic and non-performing operations." For instance, it has just agreed to sell its Sierra aftermarket marine and power equipment operations to Colfax Corp. Another element of the plan calls for Dana to "complete integration efforts and realize synergy savings." So far this year, the company has closed six manufacturing facilities and 13 distribution centers. In all, Dana plans to close a total of 14 manufacturing facilities and 29 distribution points. All are expected to be at locations outside the U.S. and Canada.