Icahn’s Federal-Mogul Drops Most in 3 Months on Profit Miss
The shares tumbled 9.5 percent to $16.81 at the close in New York and were among the biggest decliners in the Russell 2000 Index. (RTY) The drop, the steepest since Jan. 9, brings the stock’s loss for the year to 15 percent.
Federal-Mogul, which was 81 percent controlled by Icahn as of Dec. 31, has been closing factories in western Europe and North America, where labor costs are higher. Still, powertrain sales on the European continent grew 10 percent during the quarter on a constant dollar basis as revenue in that unit climbed 11 percent. Lower-than expected results in the Southfield, Michigan-based company’s aftermarket sales hampered results, Brian Sponheimer, a Gabelli & Co. analyst based in Rye, New York, said.
“Aftermarket sales were a little light relative to expectations given the terrible winter weather that should have helped the chassis, brakes, and wiper business,” he said via e-mail. He recommends buying the shares.
Federal Mogul reported first-quarter net income of $40 million, or 27 cents a share, compared with a loss of $34 million, or 34 cents, a year earlier, according to a statement. Sales rose 7.2 percent to $1.78 billion. Three analysts surveyed by Bloomberg estimated a per-share profit of 33 cents on sales of $1.81 billion.
Sales in the company’s aftermarket parts unit rose 0.8 percent to $720 million.
To contact the reporter on this story: Mark Clothier in Southfield, Michigan at email@example.com