Federal-Mogul Soars By 30 Percent On Positive Q2 Earnings Result

Updated on

The stock price of Federal-Mogul Corporation (NASDAQ:FDML), a global supplier of automotive parts and accessories majority owned by activist investor Carl Icahn, skyrocketed by 30% after the company reported positive earnings results on Monday. Icahn owns 81% of the company.

Federal-Mogul Corporation FDML

Federal-Mogul stock gains

During afternoon trading in New York on Monday, the shares of Federal-Mogul Corporation (NASDAQ:FDML) were trading around $13.86 per share. The stock previously closed at $10.68 per share. Over the 52-week range, the stock value of the company’s lowest level was $4.80 per share. Federal-Mogul’s stock gained 33% this year until July 19, higher than the 24% gain recorded by the Russell 2000 Index. The company is the highest gainer in the Index today.

For the second quarter of 2013, Federal-Mogul Corporation (NASDAQ:FDML) reported a net income of $56 million compared with -$59 million net losses in the same period last year. The company posted $1.772 billion sales, higher by $97 million (5.8%) compared with $1.675 billion sales a year ago. The company said its earnings per share (EPS) was $0.57 compared with its -$.060 losses in the second quarter in 2012.

Federal-Mogul Corporation (NASDAQ:FDML) said its operational EBITDA was $163 million, 9.2% of its sales compared. Last year, its operational EBITDA was $157 million. The company ended the quarter with $73 million free cash flow.

Federal-Mogul to improve its EBITDA

According to the company, its restructuring, sustainable cost reductions, and margin improvement initiatives along with a more stable market environment helped improve its EBITDA.

In a statement, Rainer Jueckstock, co-CEO and CEO of Powertrain Segment of Federal-Mogul Corporation (NASDAQ:FDML) said, “Federal-Mogul’s second quarter results show the benefit of cost reductions and restructuring actions implemented to eliminate loss-making units and improve overall operating leverage. The cash flow in Q2 2013 is also an important sign of improved working capital stability.  While the results are encouraging, we are continuing to implement restructuring actions to raise capacity utilization and improve operating performance.”

The company operates two business segments- the Vehicle Components and Powertrain segments. During the second quarter, the Powertrain segment posted $1.1 billion revenue and Vehicle Components generated $783 million in revenue.

Jueckstock’s views

Jueckstock said the Federal-Mogul Corporation (NASDAQ:FDML) Powertrain segment is expected to perform better because of its rationalization capacity and the European market is showing signs of stabilization. On the other hand, its Vehicle Components segment’s bottom line is also improving due to its restructuring efforts including the closure of its seven sites.

Federal-Mogul Corporation (NASDAQ:FDML) completed a shareholder rights operating and generated $500 million on July 19.

Leave a Comment