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WABCO Holdings Inc. Reports Operating Results (10-Q)

November 04, 2009 | About:
10qk

10qk

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WABCO Holdings Inc. (WBC) filed Quarterly Report for the period ended 2009-09-30.

WABCO is one of the world's leading providers of electronic braking stability suspension and transmission control systems for heavy duty commercial vehicles. WABCO products are also increasingly used in luxury cars and sport utility vehicles. Wabco Holdings Inc. has a market cap of $1.52 billion; its shares were traded at around $23.72 with a P/E ratio of 35.9 and P/S ratio of 0.6.

Highlight of Business Operations:

Sales for the third quarter of 2009 were $382.0 million, a decrease of 41.7% (38.4% excluding foreign currency translation effects) from $655.0 million in 2008, which includes approximately 4% of incremental sales due to the consolidation of WABCO-TVS which was acquired during the second quarter of 2009. The decrease was attributable to the significant decline in commercial vehicle production that was evident in most of our markets. In addition to the deterioration in the end market demand, inventory reductions that continued across most commercial vehicle manufacturers contributed to the production decline. In due course, as it relates to the European market, once inventories have been exhausted, we would expect to see an uptick in production to be more in line with sales. Sales in Europe, our largest market, decreased approximately 51.7% (48.6% excluding foreign currency translation effects), which based on our estimate, was better than European truck production. Sales decreased 17.0% in North America, which was less than the decrease in North American truck production. In Asia sales increased 34.0% (30.5% excluding foreign currency translation effects). The sales increase in Asia included an increase in China sales of 19.0% (18.8% excluding foreign currency translation effects) which was impacted by a higher production of trucks for the domestic markets. However, sales growth in China was less than the increase in production of new commercial vehicles due to the significant decline in trucks produced for export which carry a higher content per vehicle than trucks for the domestic market. The Company currently has two customers from Asia within the top five customers, compared to the prior year, when there were no customers from Asia within the top five. Total aftermarket sales, included in the geographic numbers provided above, decline in the quarter was 13.1% (7.4% excluding foreign currency translation effects), which was impacted by both the Original Equipment Supply channel and the Independent Aftermarket channel experiencing declines due to the decrease in transportation.

Sales for the first nine months of 2009 were $1,031.9 million, a decrease of 51.6% (45.9% excluding foreign currency translation effects) from $2,133.3 million in 2008. The decrease was attributable to the significant decline in commercial vehicle production that was evident across the world. In addition to the deterioration in the end market demand, inventory reductions across most commercial vehicle manufacturers contributed to the production decline. Sales in Europe, our largest market, decreased approximately 57.3% (51.3% excluding foreign currency translation effects), which based on our estimate, was better than European truck production. Sales decreased 35.3% in North America, which was less than the decrease in North American truck production. In Asia and South America sales decreased 16.1% and 49.5%, respectively (15.4% and 38.4% excluding foreign currency translation effects, respectively). The sales decline in Asia included a decrease in China sales of 13.6% (15.6% excluding foreign

currency translation effects) which was impacted by a larger decline in the production of trucks for export, which carry a higher content of WABCO products than trucks produced for the domestic markets, partially offset by an increase of the Companys compressor product line in the market as well as the increasing penetration of ABS. Total aftermarket sales, included in the geographic numbers provided above, decline in the first nine months was 23.5% (18.9% excluding foreign currency translation effects), which was impacted by both the Original Equipment Supply channel and the Independent Aftermarket channel experiencing due to declines in transportation. Necessary maintenance and the more severe weather conditions than normal in Europe in the earlier part of the year helped the aftermarket sales outperform sales to new truck and bus manufacturers.

Read the The complete ReportWBC is in the portfolios of Warren Buffett of Berkshire Hathaway, John Keeley of Keeley Fund Management, NWQ Managers of NWQ Investment Management Co.

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