DETROIT (Reuters) - American Axle & Manufacturing Holdings Inc <AXL.N> posted a bigger-than-expected quarterly loss on Friday, hit by a strike at five U.S. plants, and it repeated threats to close the factories unless workers accept steep wage cuts.
By Soyoung Kim
DETROIT (Reuters) - American Axle & Manufacturing Holdings Inc <AXL.N> posted a bigger-than-expected quarterly loss on Friday, hit by a strike at five U.S. plants, and it repeated threats to close the factories unless workers accept steep wage cuts.
About 3,650 employees represented by the United Auto Workers union went on strike at the plants in New York and Michigan on February 26, after the union and the company failed to reach a new labor contract.
The company has said it must cut wages and benefits that it says run three times higher than competitors, a demand which has been rejected by the UAW.
!ADVERTISEMENT!"While it would be tragic to dismantle American Axle's original U.S. manufacturing base, American Axle will be forced to consider additional restructuring and capacity rationalization actions if the UAW refuses to accept the changes needed to achieve market cost competitiveness at these facilities," Chief Executive Dick Dauch said in a statement.
American Axle reported a first-quarter loss of $27 million, or 52 cents per share, compared with year-earlier net income of $15.7 million, or 30 cents per share.
Excluding a one-time charge, the quarterly loss amounted to 48 cents per share, sharply wider than the 2-cents-per-share loss projected by Reuters Estimates.
JPMorgan analyst Himanshu Patel said the big miss suggested that underlying earnings were still weak in a slumping market for trucks and big SUVs, apart from the impact of the strike.
Revenue fell 27 percent to $587.6 million.
American Axle estimated that the eight-week-old strike had reduced revenue by $132.6 million and operating income by 56 cents per share.
Shares of American Axle fell 3.25 percent, or 73 cents, to $21.12 in morning trade on the New York Stock Exchange.
Patel said in a research note that he maintained an overweight rating on American Axle despite the sluggish results, as he expected savings from a new union contract.
Customer production volumes for the full-size truck and SUV programs American Axle currently supports for General Motors Corp <GM.N> and Chrysler LLC fell about 31 percent in the quarter from a year earlier, the company said.
American Axle and the UAW have been negotiating almost daily since April 9, when contract talks resumed. They had been stalled for nearly a month while the two sides sparred over financial details.
The strike also has forced GM to at least partly idle about 30 plants in North America due to parts shortages. In 1994, GM sold off plants to an investor group that created American Axle, which derived about three-fourths of its revenue from the automaker in the first quarter.
(Editing by Dave Zimmerman)
