American Axle & Manufacturing Holdings Inc. (NYSE: AXL) reported this morning a loss for its first-quarter, on pressure from a United Auto Workers strike at five U.S. plants that started eight weeks ago.The company said it swung to a loss during the first quarter of $27 million, or 52 cents per share. This is a significant decline from the same period a year ago when the company was able to report a quarterly profit of $15.7 million. Its earnings per share also came in a year ago at 30 cents, exceeding analysts' forecast for a profit of "only" 23 cents per share. For this quarter, analysts were expecting earnings of $ 0.04 a share.
American Axle also announced a drop of 24% in its quarterly revenue, which slipped down to $587.6 million, compared with $802.2 million a year earlier. As a main factor that impacted the company's sales numbers, American Axle blamed the ongoing strike by its United Auto Workers employees that slashed revenue by $132.6 million and operating income by 56 cents per share. In addition, lower production volume of trucks and SUVs at General Motors Corp. (NYSE: GM) and Chrysler LLC contributed to a decline in sales.
Currently, the company is continuing its negotiations with the union. As a measure to maintain its U.S. plants, American Axle is considering cutting wages and benefits that it sees three times higher than competitors. "While it would be tragic to dismantle American Axle's original U.S. manufacturing base, American Axle will be forced to consider additional restructuring and capacity rationalization actions if the UAW refuses to accept the changes needed to achieve market cost competitiveness at these facilities," the company's Chief Executive stated.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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