Boston, MA 04/30/2014 (wallstreetpr) – Dana Holding Corporation (NYSE:DAN) reported their first quarter result ended March 31, 2014, with sales of $1.69 billion and net income of $34 million.
Steady operating performance
Sales remained flat at $1.69 billion despite favorable demand in the end-market segment, due to adverse currency impact in South America especially Venezuela operations. The currency devaluation by the Venezuelan government has impacted a charge of $17 million for Light Vehicle Driveline business in 1Q2014. Consequently, it affects the Company’s adjusted EBITDA and net earnings. Adjusted EBITDA was down by 100 basis points due to Venezuela’s currency effects.
But, Dana Holding Corporation (NYSE:DAN) has improved its gross profit and operating earnings with increase in production volumes and cost reduction measures. Adjusted EBITDA during the period was $165 million, up by 4% compared to prior year period that improved the adjusted EBITDA margin by 40 basis points to 9.8% and to 10.8%, excluding currency devaluation. During 1Q2014, adjusted net earnings were $57 million, or $0.32 per share, down by 3% year over year due to higher interest and tax expenses.
Weak cash flow
Dana failed to report positive free cash flow in 1Q2014 despite $40 million interest payment received from note receivables. It was due to higher change in working capital of $145 million, interest payments of $57 million and capex of $36 million. So, total cash used during 1Q2014 increased to $117 million with the addition of $64 million cash for the repurchase of shares and $22 million for debt repayment.
Positive trends improve margin
In 2014, the end-market demand expects to improve in North America and Europe, however, Asia remain weak. Dana expects some positive trends in across segments such as continued growth in full frame light trucks, improvement in North American commercial vehicles and increase in light and commercial vehicle in Brazil due to a slowdown in exports. But, currency volatility continues to affect Dana’s operating efficiency in the emerging countries such as South America, India, Thailand and South Africa.
Considering the market trends, Dana Holding Corporation (NYSE:DAN) expects that sales will grow through booked orders and new sales and anticipates sales of $6.8 to $6.9 billion in FY2014 that help to improve the operating margin and generate positive cash flow in the future.
