American Axle Q4, 2019 sales suffer from GM strike


DETROIT — The national UAW strike at General Motors slashed fourth quarter and full year sales at American Axle & Manufacturing Holdings Inc. by about $186 million and $243 million, respectively.

American Axle shares were down more than 15 percent to $8.66 in midday trading Friday.

The driveline and drivetrain systems supplier said in a statement Friday that the latest financial results were impacted severely by the 40-day strike, stretching from the latter part of the third quarter into the fourth quarter.

GM, a major American Axle customer, accounted for 41 percent of the parts maker’s 2018 net sales.

American Axle’s fourth-quarter net sales dropped nearly 16 percent to $1.43 billion. The company reported a fourth-quarter net loss of $454.4 million, compared with a net loss of $361.8 million in the same period last year. The fourth-quarter red ink included a loss of approximately $52 million as a result of the strike and pre-tax goodwill impairment of $440 million. The strike had a negative impact on American Axle’s third-quarter results as well.

Fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization fell 20 percent to $193.5 million. American Axle said the GM work stoppage affected adjusted EBITDA by $66 million in the fourth quarter.

Adjusted free cash flow during the quarter fell 18 percent to $116.5 million.

The supplier’s core driveline unit sales declined 13 percent to $1.02 billion, while sales in its metal-forming business unit dropped 14 percent to $401.2 million.

Sales in American Axle’s casting unit fell 31 percent to $127.5 million. The company said the casting unit’s financial results have been restated to include only U.S. operations, and that it completed the sale of its U.S. iron casting operations in December.

Full year
For all of 2019, American Axle’s net sales fell 10 percent to $6.53 billion, reflecting the UAW strike at GM and lower light-vehicle output in key global markets.

The company’s full-year net loss of $485.5 million compared with a net loss of $57.5 million in 2018.

Full-year adjusted EBITDA dropped 18 percent to $970.3 million.

Adjusted free cash flow fell to $207.8 million last year, compared with $322.3 million in 2018.

Aside from the UAW strike, American Axle said 2019 results were negatively impacted by lower-than -expected production volumes in China, Europe, India and certain key programs in North America, as well as customer launch downtime. Uncertainty over trade policy, dominated by U.S. talks with China, also posed challenges during the year, the company said.

The company is targeting sales of $5.8 billion to $6 billion in 2020, lower than previous years.

American Axle CEO David Dauch expects the negative impact from lower China production resulting from the deadly coronavirus outbreak to tally at least $25 million, but that could change if the epidemic is prolonged.

American Axle & Manufacturing, of Detroit, ranks No. 40 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $7.27 billion in 2018.




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