March 14 (Bloomberg) -- Dana Holding Corp., a maker of axles for cars, trucks and construction equipment, aims to boost profit margins to as much as 12 percent by next year as fuel-saving technologies fetch higher prices.
Dana, based in Maumee, Ohio, received 59 percent of its $7.59 billion in 2011 revenue from commercial vehicles with the rest from cars and light trucks. That split is helping Chief Executive Officer Roger Wood secure contracts for new efficient products that command a higher price as truck producers adapt to rising fuel prices and tightening U.S. fuel and emission rules.
Work-truck buyers are willing to pay more for vehicles equipped with Dana’s aluminum and steel driveshaft, which weighs 100 pounds less than an all-steel one. That means Dana can charge more to increase profit before interest, depreciation, taxes and amortization relative to sales as high as 11 percent this year and 12 percent next year from 10 percent last year.
“These are margins more like I’m used to,” Wood said yesterday in an interview in New York, where Dana conducted a presentation for investors. Wood, a 26-year veteran of BorgWarner Inc., joined Dana in April and is the company’s fourth CEO since it left bankruptcy in 2008.
The new driveshaft is in production with one truckmaker, which Wood declined to identify. Other manufacturers are considering adding it, he said, including automakers. Dana had said car companies weren’t yet willing to adopt the more expensive part.
Wood spent part of his first 11 months as CEO culling projects not focused on trends such as fuel efficiency and tightening emission standards. Those that did, he supported with time and money. Dana has introduced 14 new products since the end of 2010, all of which will be in production by the end of this year, Wood said.
“We don’t know what the industry is going to look like 20 years from now but emissions and fuel technologies are going to be important, because those things aren’t going away,” he said. “When we focus our technology and innovation on market drivers, we’ve got a good shot at it being successful.”
Dana fell 1.4 percent to $16.06 at the close in New York. The shares have gained 32 percent this year.
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