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Federal-Mogul Corporation (FDML - Snapshot Report) revealed that its Powertrain Segment has divested its Sintertech SAS division to “TMC” on Mar 8, 2013. TMC is a closely held subsidiary controlled by Thierry Morin – a French Industrialist and former Chairman and Chief Executive Officer of Valéo Corporation.
Sintertech develops, manufactures and sells powdered metal components for engines and gearboxes for vehicle applications and other industrial equipment. It also produces powdered metal filtration elements primarily for the chemical industry under Sintertech, Metafram, Metagliss and Poral brand names.
The business includes three manufacturing plants in France located in Veurey-Voroize, Pont de Claix and Oloron employing more than 400 people. Despite being popular in European industries for production of powdered metal components for a wide variety of applications, Sintertech business does not form a part of core Federal-Mogul Powertrain’s long-term portfolio strategy.
Federal-Mogul, a Zacks Rank #4 (Sell) stock, reported an adjusted loss of $41 million or 42 cents per share in the fourth quarter of 2012 in sharp contrast to a profit of $52 million or 53 cents in the same quarter of 2011. With this, the company missed the Zacks Consensus Estimate of a profit of 15 cents per share.
Revenues in the quarter slid 4% (2% on a constant currency basis) to $1.6 billion due to a 13% decline in global commercial and industrial engine production, and a 14% decrease in European light vehicle production, as well as a shift in mix within light vehicle production from higher content diesel to gasoline products. Adjusted Operational EBITDA dipped 45.1% to $84 million from $153 million in the fourth quarter of 2011.
Federal-Mogul is a leading supplier of products and services to global manufacturers and service providers of vehicles and equipment in the automotive, light, medium and heavy-duty commercial, marine, rail, aerospace, power generation and industrial markets. The company’s Powertrain Segment designs and manufactures original equipment powertrain components and systems protection products for automotive, heavy-duty, industrial and transport applications.
Federal-Mogul expects European sales to improve based on its recovery in the second half of the year. The company also expects a shift in mix to diesel from gasoline engines in the long run since the former is preferred by Europeans for being more fuel efficient. Federal-Mogul also anticipates stability in its core aftermarket business in North America as it is gradually exiting unprofitable businesses and focuses on product differentiation.
While we avoid Federal-Mogul, a few stocks from the same industry that warrant a look include Oshkosh Corporation (OSK - Snapshot Report), STRATTEC Security Corporation (STRT - Snapshot Report) and Gentherm Incorporated (THRM - Snapshot Report). Gentherm and STRATTEC Security are Zacks Rank #1 (Strong Buy) stocks while Oshkosh carries a Zacks Rank #2 (Buy).
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