More Action to Vend LVS Biz at ARM - Analyst Blog

ArvinMeritor Inc. (ARM) has completed the sale of its Body Systems business to auto supplier, Inteva Products LLC, for $27.27 million. The selling price consisted of $12.27 million in cash and a promissory note of $15 million. The Troy-Michigan based Inteva manufactures car doors, roofs, electronics and other products.

ArvinMeritor over a long period has been trying to wind up its Light Vehicle Systems (LVS) business to avoid the cyclical aberrations of the auto industry that it entails. The company's LVS segment includes the Body Systems business, which supplies roof and door systems for passenger cars to original equipment manufacturers (OEMs), and the remaining Chassis businesses. After its divestment, the company will be able to focus on its commercial vehicles business.

In fiscal 2009, the company finally sold off its 51% stake in Gabriel de Venezuela and 57% in the U.K.-based joint venture, Meritor Suspension Systems, with Mitsubishi Steel Manufacturing Company.

The company also sold both the Wheels business and Gabriel Ride Control Products in North America, thus reducing the overall LVS business to 25% of total sales as of fiscal 2009.

ArvinMeritor Inc., a Zacks #3 Rank (Hold) stock, posted a profit of $8 million or 8 cents per share during the fourth quarter of its fiscal year ended September 30, 2010 in contrast to a loss of $11 million or 16 cents per share in the same period a year ago. The company fared well compared with the Zacks Consensus Estimate of breakeven results.

Revenues in the quarter grew 37% to $956 million due to strong truck demand in Europe and the U.S. Operating income increased $20 million to $31 million. Adjusted EBITDA went up 63% to $70 million, reflecting a 1.1 percentage point improvement in margins to 7.3% from the last year quarter.

Higher sales volumes in the company's Commercial Truck segment and strong demand in Asia Pacific favorably affected the adjusted EBITDA margins, despite reduced demand for certain military OEM and service products.

For fiscal 2010, ArvinMeritor reported a profit of $4 million or 5 cents per share compared with a loss of $30 million or 42 cents per share in the prior fiscal year. Sales went up 17% to $3.6 billion from the prior fiscal year.