ArvinMeritor reports increased sales, earnings for third quarter

ArvinMeritor, Inc. recently reported increased earnings and income across its Commercial Vehicle Systems and Light Vehicle Systems groups for the third quarter ended June 30, 2008.

"ArvinMeritor's favorable product, customer and geographic mix, combined with a dedicated focus across the company to implement and maintain cost reduction initiatives, drove strong results this quarter," says Chip McClure, the company's chairman, CEO and president. "I am pleased that the hard work and commitment of our global team is being reflected in our financial results."

In the third quarter of fiscal year 2008, ArvinMeritor posted sales from continuing operations of $2.0 billion, up from $1.7 billion in the same period last year. Approximately one-half of this increase was due to stronger currencies outside the U.S. The remaining increase is comprised of higher medium and heavy duty truck production in Western Europe; favorable industry conditions in South America and Asia Pacific; a steady demand for the company's light vehicle product mix in Europe; and increased specialty sales, including military products in North America and off-highway products in China.

New developments to drive global growth

The company is currently launching Wave 2 of the Performance Plus program, which is designed to drive idea generation and implementation with an emphasis on the company's business in Europe. ArvinMeritor's initial Performance Plus initiative, launched in December 2006, will fully achieve the company's 2008 target of $75 million in savings net of material cost increases. ArvinMeritor is in the process of re-energizing and refreshing the internal resources dedicated to the program. This team will review processes, products and operations across the business to identify additional ways to foster profitable growth, reduce costs, achieve operational excellence and encourage innovation.

"Through Performance Plus, we are cultivating an environment of innovation and continuous improvement," says Jay Craig, ArvinMeritor's chief financial officer, who played a key role in leading Performance Plus since its launch in 2006. "It is not a short-term solution — it's more like a long-distance race with no finish line." Wave 2 will add confidence to the company's targeted goal of $75 million in savings for fiscal year 2009, in spite of unprecedented cost increases in raw materials.

ArvinMeritor recently announced another strategic move to expand its commercial vehicle aftermarket business with the acquisition of Trucktechnic, a remanufacturer and distributor of commercial vehicle disc and air system components based in Liege, Belgium.

Trucktechnic's line of brake kits, components, and testing equipment expands and complements ArvinMeritor's existing European aftermarket portfolio both in product breadth and market depth and will be key in supporting the company's continued growth in that region. This acquisition follows the company's purchase of Mascot Truck Parts in December 2007.

Since that time, the company announced a multi-million-dollar supply agreement to provide remanufactured transmissions and axle carriers to Navistar Parts, and has recently entered into agreements with PACCAR to support its Peterbilt and Kenworth dealer networks in Canada with the Mascot brand of remanufactured transmissions and axle carriers.

Outlook on the new year

The company's calendar year 2008 forecast for light vehicle sales is in the range of 14.4 to 14.6 million vehicles in North America. ArvinMeritor's forecast for Western Europe is 16.6 to 16.9 million vehicles, down from 17.1 in the prior forecast. The company expects sales from continuing operations in fiscal year 2008 to be in the range of $7.1 billion to $7.3 billion.

"We look forward to 2009 with optimism," adds McClure. "We have improved our results consistently through the first three quarters of fiscal year 2008 despite deterioration in the North American and European markets. Next year, we expect to benefit from Class 8 commercial vehicle production volumes in North America which are forecast to increase in the range of 20 to 40 percent."

For more information about ArvinMeritor, visit the company's Web site.