Diverse customer base attributed to Federal-Mogul's success

In its second quarter out of bankruptcy emergence, Federal-Mogul is reporting record profits.

The company, which spent years mired in Chapter 11 bankruptcy, attributes this bout of success with its globalization efforts along with the diversity of its customer base.

“No customer accounts for more than 6 percent of our total revenue,” says Jay Burkhart, senior vice president, global aftermarket, for Federal-Mogul. “This reduces the impact of softness in any specific market or with a single customer.”

The company’s second quarter report boasts a net income increase of $90 million, a 13 percent increase of quarterly revenue totaling $2 billion and a 23 percent gross margin improvement to $396 million.

The $90 million profit increase represents 90 cents per share, compared with $4 million, or 4 cents per share, a year ago. Federal-Mogul’s global aftermarket sales for the second quarter totaled $753 million.

President and CEO Jose Maria Alapont said during a conference call that this was the eighth consecutive quarter of sales increases. During the call, Alapont also discussed the company’s development of environmentally friendly products, along with a new material for insulation applications using recycled goods, and the finalization of a contract with a major Chinese wind turbine manufacturer to supply bimetallic self-lubricating industrial bearings.

Federal-Mogul saw sizeable increases in Europe, along with Brazil, Russia, India and China, also known as BRIC countries, while increasing productivity and reducing cost structure, adds Burkhart.

The company achieved a 23 percent sales growth in Europe, as well as 50 percent sales increases in the BRIC countries, adds Alapont. He says Brazil recently completed a successful launch of a powertrain component facility in Araras. Additionally, Federal-Mogul introduced a wiper and brake pad portfolio in the Russian market.

Prominent branding also plays into the company’s success, says Burkhart.

“Leading brands are increasingly important to automotive service professionals, who often have just one chance to get the job done right for today’s time-starved consumer,” he adds. “Brands also play a vital role in helping the aftermarket compete for the consumer’s repair dollar. Vehicle owners, who already face rising fuel prices and other operating costs, expect accurate diagnosis, dependable, high quality repairs and timely completion.

“Premium brands carry the reputation for dependability, but they also have key quality and design advantages that help solve repair problems and speed the repair for the technician, while bringing additional value to the consumer.”

For more information, look for our Vendor Newsmaker in the September issue of Aftermarket Business magazine.