The vehicle component manufacturer Dana Holding Corp. on Thursday reported net income for the final quarter of 2014 more than doubled from the same time a year earlier.
Net income increased to $109 million from $42 million while sales for the fourth-quarter of 2014 totaled $1.58 billion, compared with $1.62 billion for the same period a year ago, with unfavorable currency lowering sales by $106 million, according to the company.
During the fourth quarter the company said it took several steps to increase its value including divesting of a South American business, completing a settlement over its pension program and refinanced long-term debt.
Net income for all of 2014 totaled $328 million compared to $260 million a year earlier while sales for the year were $6.6 billion, $152 million lower compared with a year ago, with unfavorable currency accounting for more than $200 million of the change, according to Dana.
It said sales volume and mix was largely neutral compared with the previous year, as stronger demand in North American and European light- and commercial-vehicle markets were more than offset by weaker demand in global off-highway and South American medium- and heavy-truck markets.
"We are pleased with our 2014 results, especially given a number of end-market challenges and currency volatility we encountered during the course of the year,” said President and CEO Roger Wood. “We continue to generate strong free cash flow, providing us the ability to continue to invest in the business for the future and return shareholder value through execution of our share repurchase and dividend programs.”
Dana’s commercial vehicle driveline technologies business reported sales were $1.84 billion for 2014, compared with $1.86 billion in 2013, with lower currency rates getting some of the blame for the slight decline. Adjusting for the effects of currency, sales increased by about $27 million from the previous year, driven by increased Class 8 and medium-truck production in North America, which was tempered by significantly lower medium- and heavy-truck production in South America, according to the company.
Commercial vehicle segment earnings before interest, taxes, depreciation and amortization for the year was $172 million, $22 million lower than 2013, resulting in a margin of 9.4% for the year. Dana said EBITDA and margin performance were adversely impacted by increased costs of about $11 million from supply chain inefficiencies as the company continues to optimize its supply base and transition to new global suppliers. Also, there was an increased warranty expense of about $8 million when compared with 2013.
The company’s power technologies operation saw sales of $1.05 billion last year, compared with $1.03 billion in 2013. Currency movements lowered sales by $16 million when compared with last year, while stronger global light-vehicle engine production and increased medium- and heavy-truck production levels in North America provided a volume benefit of $42 million, according to Dana.
Segment EBITDA was $154 million, an increase of $4 million over last year, providing a margin of 14.6 percent. Dana said favorable volume and mix of $11 million offset the effects of unfavorable currency of $4 million while net material cost savings and other cost-reduction actions partially offset specific warranty settlements.
Dana’s power technologies also reported increases in sales in 2014 from the year before along with slightly higher EBITDA, while its light vehicle driveline technologies segment saw slight drops in both areas.
"Three of our four business units recorded record margin performance in 2014,” Wood said. “Our commercial vehicle business was impacted by a significant supply-chain initiative that we undertook to provide the business more flexibility and cost competitiveness for the long term. We expect to begin realizing the benefits of this action during the course of 2015 as we complete this activity.”
Dana also reiterated financial targets for 2015 that include sales of $6.4 to 6.5 billion, adjusted EBITDA of $740 to $760 million and diluted adjusted earnings per share of approximately $2.05 to $2.15.