Federal-Mogul CEO Resigns; Profit Up at Johnson Controls
Federal-Mogul Corp. said Chief Executive Richard Snell resigned, as the world’s No. 1 maker of engine seals and bearings became the latest auto-parts supplier to say third-quarter earnings will miss forecasts.
Meanwhile, Johnson Controls Inc., the world’s No. 2 maker of vehicle seats and interiors, bucked the industry trend with an announcement that profit will probably exceed analyst estimates in the fourth quarter.
Federal-Mogul said Snell, 59, who had been CEO since 1996 and was also chairman and president, was replaced as chairman by board member Robert S. Miller. Miller was also named interim chief executive while the company searches for a new CEO.
The Southfield, Mich.-based company said it expects to about break even in the third quarter because of weakness in European currencies, slower U.S. sales of heavy-duty trucks and of replacement parts, and its failure “to fully achieve planned efficiencies.” Analysts were expecting earnings of 54 cents a share, according to First Call/Thomson Financial.
Under Snell, the company has struggled to integrate large acquisitions from 1998, which included British gasket maker T&N.;
Federal-Mogul also said it will pay more than $310 million this year for asbestos-related insurance and legal claims, which stem from the T&N; acquisition. The payments won’t affect earnings, it said.
Federal-Mogul’s shares fell $1.25, or 14%, to close at $8 on the New York Stock Exchange.
Johnson Controls said it expects to earn $1.60 to $1.63 a share in the quarter ending Sept. 30, up from $1.38 a year ago and beyond the $1.57 average estimate of analysts, citing improved profit margins in its auto parts and its building controls businesses.
Auto parts accounted for about 75% of the Milwaukee-based company’s $12.1 billion in sales last year. Johnson Controls shares closed off $1.31 at $47.13 on the NYSE.
