Wabco Reports 2Q Declines in Net Income, Revenue
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Wabco Holdings Inc. reported lower net income and revenue in the second quarter as global economic growth slowed in key regions, including its primary market — Europe.
The company does 76% of its business outside North America.
For the period ended June 30, Wabco reported quarterly net income fell to $70.6 million, or $1.38 per diluted share, from $104.4 million, or $1.95, a year earlier.
Revenue slipped to $913 million compared with $1 billion a year earlier amid lower sales in the overall truck, bus and trailer markets, according to the Bern, Switzerland-based company. The off-highway vehicle and passenger car markets also declined.
Wabco manufactures a wide range of commercial vehicle components for trucks, trailers and buses.
Its North American sales to truck and bus manufacturers increased 3.5% — 4.4% excluding foreign currency translation effects.
A corporate statement said, “The second quarter of 2019 was affected by a slowdown in economic growth expectations across most regions, leading to a further deterioration in key markets where we operate. This impact was partially offset through agile management of our variable cost structure and discretionary operating expenses. Due to the size and speed of the drop in markets, we were unable to fully offset the market impact.”
For the six-month period, net income fell to $154.5 million, or $3.01, compared with $205 million, or $3.82. Revenue dropped to $1.8 billion from $2 billion a year earlier.
Total year-to-date sales in North America increased 1.2% — 2.2% excluding foreign currency translation effects. Within that, its sales to truck and bus manufacturers increased 7.1% — 8.2% excluding foreign currency translation effects.
Weakening markets for off-highway vehicles and passenger cars, as indicated in the beginning of 2019, continued to negatively contribute to sales growth year over year for the first six months of 2019.
On March 28, Wabco entered into a $7 billion agreement to be acquired by ZF Friedrichshafen AG. Wabco shareholders adopted the plan June 27.
WABCO Shareholders Approve ZF Friedrichshafen Acquisition. https://t.co/FvNP7jcQYk pic.twitter.com/eCHYODY1Si — WABCO (@WABCO) June 27, 2019
Wabco suspended its share repurchase program due to the pending merger and stated it does not expect to reinstate the program this year.
The merger is expected to close in early 2020.
Wabco’s largest selling products are pneumatic antilock braking systems, electronic braking systems, electronic stability control systems, brake controls, automated manual transmission systems and air disc brakes. It also makes conventional mechanical products such as actuators, air compressors and air control valves for medium- and heavy-duty trucks, buses and trailers.
In addition, it supplies commercial vehicle aftermarket distributors and service partners as well as fleet operators with replacement parts, fleet management solutions, diagnostic tools, training and other expert services. It also provides remanufacturing services globally.