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Vehicle component manufacturer Dana Inc. reported a slight increase in revenue but a dip in profits for the fourth quarter as higher interest expenses and a slide in demand for heavy-duty trucks chipped into its earnings.
The Maumee, Ohio-based company reported Q4 net income of $85 million, a 15% decline from the $100 million earned in the same period a year earlier. Dana posted 58 cents in diluted earnings per share compared with 69 cents in Q4 2018. Revenue for the quarter increased $14 million to $1.99 billion compared with $1.97 billion in the same period a year earlier.
For the full year, Dana’s profit fell 47.1% to $226 million from $427 million in 2018. The company posted $1.56 in diluted earnings per share compared with $2.91 in 2018. One-time charges of $259 million tied to changes in its pension plans weighed down the 2019 results, the company said.
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That said, revenue for the year grew 5.9% to $8.6 billion, a record. That compared with $8.1 billion in the prior year. The gain came from both acquisitions and the fulfillment of a large sales backlog that’s expected to endure; the company said it has a sales backlog of $700 million through 2022.
About 15% of Dana’s backlog is building electric vehicle components, up from just a small percentage a few years ago. To help with this demand, the company made five acquisitions last year to increase its capability to provide components for electric vehicles.
“Not only have these acquisitions contributed to our topline growth, but they have added new technologies to Dana’s existing in-house electro-mechanical capabilities to address the current vehicle electrification megatrend,” James Kamsickas, Dana’s chairman and CEO, said during a Feb. 13 conference call with industry analysts.
Last year Dana reached a deal to provide electric drivetrains for Paccar’s Peterbilt and Kenworth electric truck programs. The three-year program starts later this year and adds about $200 million in sales for Dana. It will provide an electric motor and drive system, battery modules and battery management, an onboard charger and other systems, Kamsickas said.
In another initiative, the company is working to build its global business, especially in emerging markets such as India and China. It opened six new facilities in Asia during the past year, Kamsickas said.
Still there are headwinds, mainly in sluggish markets for heavy-duty trucks and construction and agricultural equipment. It expects a $500 million slowdown in that business this year, with $150 million coming from fewer sales to heavy-duty truck builders.
“Despite expected softer demand in our heavy-vehicle markets, we continue to successfully manage through this cycle and execute our strategic plan,” said Jonathan Collins, Dana’s executive vice president and chief financial officer.
He said the sales backlog and multi-market focus will help buffer this lower demand.
Collins also provided financial targets for 2020. He said the company expects revenue of $8.25 to $8.75 billion, and forecasts diluted adjusted earnings per share of $2.65 to $3.15.
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