American Axle Sales Decline 34 percent in Q4 Forecast
American Axle and Manufacturing (AAM) has forecast that its sales declined 34 percent in the fourth quarter of last year as a result of the significant decline in vehicle production in the United States, reports Reuters. It expects that product sales were worth $2.1 billion in 2008, with fourth-quarter sales declining from $757 million in 2007 to $500 million in 2008. AAM attributes the recent significant fall in sales of trucks and sport utility vehicles (SUV) in the local market, for which it supplies parts, as the major driver of the projected losses. However, it maintained liquidity of over $400 million at the end of 2008, and expects its overall financial performance in 2008 to have been in line with that of 2007.
Like most U.S.-based component suppliers, AAM is struggling to sustain a business model in the current critical scenario, as all of its automaker customers have slashed production drastically to cope with the decline in vehicle demand. Credit ratings agencies Standard and Poor's and Fitch Ratings have already slashed their outlook for the company, owing to its growing inability to meet future financial obligations. It had lost $1.1 billion last year up until September 2008, due to rapidly falling truck production volumes and heavy expenses borne out of buy-outs of temporary and permanent workers. AAM posted a third-quarter loss of $441 million last year, and recorded a dramatic decline in its sales of 32 percent compared with the same period in 2007, owing to a restructuring charge of $398 million.
