The former Meritor Automotive had sales of $1.1 billion, a decrease of 6% from the same period last year. Net income before special items was $54 million, down 7% from last year. Third quarter results included a $26 million restructuring charge for cost reduction and efficiency improvements, and a one-time gain of $6 million from the sale of land.
“Meritor had a strong third quarter in spite of the weaker euro and softening in the North American heavy truck market,” said ArvinMeritor Chairman and CEO Larry Yost. “We continue to benefit globally from market penetration gains and higher vehicle production levels in our Light Vehicle Systems business, as well as from strong demand in Heavy Vehicle Systems markets outside of North America.”
The former Meritor Heavy Vehicle Systems, which ArvinMeritor now calls Commercial Vehicle Systems, had sales of $735 million, a 9% decrease from third quarter 1999. Weaker demand for heavy trucks in North America was blamed for the decline, along with the negative impact of European currency exchange rates. Additionally, transmission and clutch sales are now reported as part of the ZF Meritor joint venture formed last September. Excluding $49 million of those sale in last year’s third quarter, HVS sales in North America were down 8% while total HVS sales declined 3%. Strong truck-build volumes drove a 15% increase in European HVS sales, before taking into account the $14 million impact of currency exchange. South American sales were up 44%, while sales in other world regions were up 16%.
Light Vehicle Systems sales decreased 1% in the third quarter to $406 million. Strong worldwide new vehicle volumes and market penetration gains, principally in door systems, were offset by the impact of Merit’s divestiture of its North American seat adjusting systems business in first quarter plus the negative impact of currency translation. Ongoing LVS sales in North America increased 17% before the $36 million sales decline resulting from the divestiture.
The former Arvin Industries had sales of $916 million, up 8% from a year ago. Net income before special items was $31 million. Special items included $60 million involving the Arvin and Meritor merger, and a $5 million pre-tax charge for legal costs associated with operations previously owned by the company’s Maremont subsidiary.
Arvin’s quarterly sales growth exceeded that of the automotive industry’s original equipment segment, due to increased content per vehicle and participation in new OE programs, said Bill Hunt, ArvinMeritor’s vice chairman and president.
However replacement sales decreased 4%, from $280 million to $268 million and the company said weakness in the replacement market, which began in the second half of 1999, showed no signs of abating through the most recent quarter. Warehouse distributor customers have experienced similar downturns and, for the first time, major retailer are reporting flat or declining sales, Hunt said.