Monday, WABCO Holdings Inc. (WBC), a supplier of safety and control systems for commercial vehicles, reported a loss in the first quarter as sales dropped 53% from previous year on the deep decline in global demand for new commercial vehicles. Further, the company suspended payment of dividends and expanded the previously announced streamlining program to a total of about 1,550 positions.
The Piscataway, New Jersey-based company posted a first quarter net loss of $36.4 million or $0.57 per share, compared to net income of $61.3 million or $0.91 per share in the same period last year.
Excluding separation and streamlining costs, and discrete tax items, first quarter performance net loss was $5.4 million or $0.08 per share, compared to performance net income of $70.3 million or $1.04 per share last year.
On average, four analysts polled by Thomson Reuters expected the company to report a loss of $0.09 per share. Analysts' estimates typically exclude special items.
Operating margin in the quarter was negative 9%, compared to positive 11.9% a year ago. On a performance basis, operating margin declined to 0.9% from 13.0% a year earlier.
Quarterly sales declined 53% to $334.0 million from $705.4 million in the comparable period a year ago. Analysts expected the company to report revenues of $337.93 million for the first quarter.
On a local currency basis sales declined 45% from last year. The decline in sales reflects the anticipated continued deep decline in global demand for new commercial vehicles.
The company said that it achieved cost savings of $20 million in operating expenses in the quarter, representing a reduction of about 20% year-on-year. WABCO also noted that it continued significant progress in streamlining of organization by eliminating about 1,200 positions as of first quarter 2009 out of the previously announced 1,400 positions targeted for termination by end of second quarter 2009.
Looking ahead, WABCO said it is not providing full year earnings guidance due to continued uncertainties associated with 2009 market forecasts for commercial vehicles. The company expects to operate toward the low end of its previously disclosed operating framework for 2009, which estimated a 2009 sales decline of 25% to 35% in local currencies, resulting in full year reported operating margin from negative 1% to positive 2% and performance operating margin from 3% to 6%.
As a result of this, WABCO has expanded its previously announced streamlining program to a total of about 1,550 positions compared to 1,400 positions expected earlier.
Further, the company announced the suspension of the payment of dividends due to the current state of the commercial vehicle industry and the pending decision by the European Commission regarding the previously disclosed civil fine against entities in Europe of the former American Standard Companies Inc.
WBC is currently trading at $15.06 , down $2.87 or 16.01% on the NYSE.
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