QUOTE AND NEWS
ABRN  Mar 30  Comment 
ArvinMeritor, Inc. has officially changed its name to Meritor, Inc. As a result, Meritor's ticker symbol on the New York Stock Exchange is MTOR, effective at the start of trading today.
market folly  Mar 29  Comment 
Larry Robbins' hedge fund Glenview Capital has increased its position in ArvinMeritor (ARM). Due to portfolio activity on March 18th, 2011, Glenview has disclosed a 5.72% ownership stake in ARM with 5,388,617 shares. This marks a 33% increase in...
Benzinga  Mar 22  Comment 
Shares of ArvinMeritor, Inc. (NYSE: ARM) are lower on the session by 1.31%, currently trading at $18.51. The stock has been moving largely lower over the past four months and is currently consolidating between the 50-day and 200-day moving...
StreetInsider.com  Mar 16  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/ArvinMeritor+%28MTOR%29+To+Trade+on+NYSE+Under+Ticker+%27MTOR%27/6372564.html for the full story.
Market Intelligence Center  Feb 2  Comment 
ArvinMeritor (NYSE: ARM) opened at $19.98. So far today, the stock has hit a low of $18.73 and a high of $20.00. ARM is now trading at $19.03, down $1.09 (-5.42%). The stock hit its 52-Week high of $22.65 in the past week and set its 52-Week low...
MarketWatch  Feb 1  Comment 
ArvinMeritor Inc., the Troy, Mich., producer of parts and systems for vehicles and industrial applications, swung to a fiscal first-quarter loss from break-even a year earlier on 21% higher sales. For the quarter ended Dec. 31, ArvinMeritor...
TheStreet.com  Jan 10  Comment 
OAKLAND, California (Courtroom View Network) -- The jury in Phase 2 of the Bankhead v. Allied Packing asbestos trial in Oakland on Thursday awarded $13.5 million in punitive damages against two defendants, ArvinMeritor and Pneumo Abex, in addition...
TheStreet.com  Jan 7  Comment 
OAKLAND, Calif. (Courtroom View Network) -- The Bankhead v. Allied Packing asbestos mesothelioma trial returned to session Wednesday to consider awarding punitive damage against Pneumo Abex and ArvinMeritor. In his opening statement, Joe...
Metal Bulletin  Jan 4  Comment 
Inteva Products LLC has acquired ArvinMeritor Inc.'s Body Systems business for roughly $27.3 million, a move that significantly expands its global footprint.
Forbes  Jan 3  Comment 
Downgrade for Aeropostale among Monday's analyst action.




RELATED WIKI ARTICLES
 

ArvinMeritor, Inc (NYSE: ARM) manufactures auto parts for commercial trucks and trailers. The company's 10 largest customers, including AB Volvo (VOLV) and Chrysler, account for 59% of revenue.[1] ArvinMeritor faces risk from the slowing of the truck and trailer market in North America as gas prices hit this sector of the automobile market the hardest, a market upon which the auto parts industry depends heavily. The company earned $4.1 billion in revenue and incurred a net loss of $1.2 billion in net income in 2009.[2]

As Emerging Markets boom and the American auto market flattens, ArvinMeritor is looking to Asia for growth opportunities. The weakening US Dollar has affected ARM and other auto parts manufacturers by boosting ever growing international sales. Meanwhile, a rise in key input prices, including aluminum and steel, could shrink bottom line margins and topline demand if the company passes part of the price increase on to its customers.

Company Overview

Headquartered in Troy, Michigan, ArvinMeritor supplies automotive parts to various customers in North America, Europe and in other parts of the world. Its core business (almost 70% of revenues) is providing parts and equipment for manufacturers of trucks and heavy trailers. These automotive parts are primarily emissions systems, aperture systems, drive train systems and undercarriage systems. The company operates 75 manufacturing facilities in 22 countries around the world.

ArvinMeritor serves original equipment manufacturer (OEM) customers worldwide - examples of OEMs include General Motors (GM), Ford and Chrysler. Chrysler, for example, will purchase a part from ArvinMeritor and sell the part in one of its cars under the Chrysler brand. Aftermarket sales, on the other hand, refer to situations where someone, like a mechanic shop, orders a car part directly from ARM to repair a vehicle. Thus the company is tied to both original equipment production (OEM) and aftermarket trends.

The company operates through two main segments:[3]

  • Commercial Vehicle Systems (CVS) - Accounts for 75% of revenue. This segment makes undercarriage and drivetrain systems (axles and drivelines, braking systems, suspension systems, and exhaust) for medium- and heavy-duty trucks and trailers. It also includes ride control and filtration products and specialty vehicles for OEMs and the commercial vehicle aftermarket. AB Volvo (VOLV) and Chrysler are the two largest customers, with 17% and 12% of this division's sales, respectively.
  • Light-Vehicle Systems (LVS) - Accounts for 25% of revenue. This segment supplies aperture systems (roof and door systems, and motion control products), and undercarriage systems (suspension and ride control systems, and wheel products) to original equipment manufacturers (OEMs). DaimlerChrysler is the segment’s largest individual customer at 13% of revenue, followed by General Motors and Volkswagen with 9% each, and Ford with 7%.

Business Growth

FY 2009 (ended September 30, 2009)[2]

  • Net sales fell 36% to $4.1 billion.
  • The company incurred a net loss of $1.2 billion compared to a net loss of $101 million in the previous year.

Trends & Forces

Rising Steel Prices lower earnings

As an auto parts manufacturer, ArvinMeritor uses a variety of metals in the production of its products, including aluminum and steel. Hot-rolled steel in the United States is one of the most common types of steel input for auto suppliers. While prices peaked in September 2004 at $816 per metric ton, steel prices remain significantly higher than historical levels. As metal prices rises, so do the company's costs, resulting in declining earnings.

European and Emerging Markets sales offset a weakening U.S. auto market

Demand for auto parts is driven by new car sales. The percentage of sales from North America has diminished significantly in the last 3 years as the North American auto parts market flattens, a reflection of the declining U.S. auto market. In 2009, North American sales were 39% of total sales, a record low in recent years.[4] As Emerging Markets like China, who recently joined America as the largest purchasers of automobiles, demand more vehicles, demand for ArvinMeritor's parts also increase. Growing demand in emerging markets has helped ArvinMeritor avoid drastic decline in sales and earnings.

A weak dollar bolsters ever-growing international sales

With 60% of sales coming from outside of North America, ArvinMeritor has become increasingly dependent on fluctuations in the Dollar. As the dollar declines, foreign sales translate into higher dollar amounts, a boost to the company's earnings.

Reliance on small number of customers limits ArvinMeritor's bargaining power

ArvinMeritor's small customer base means that a few big players can demand ever lower prices, forcing the firm to agree to more price cuts in their products, or else risk losing a significant portion of its business. With North American automobile sales slowing there is a decrease in demand for auto parts, giving the buyers leverage in their negotiations with ArvinMeritor - which in turn has little negotiating leverage because it depends so much on a few key customers. Its 10 largest customers account for approximately 59% of revenue. AB Volvo (VOLV) and Chrysler, for example, account for 17% and 12% of the Commercial Vehicle Systems' sales, respectively.[1]

Competition

A majority of ArvinMeritor's sales are to manufacturers of heavy-duty trucks and trailers.

ArvinMeritor’s key competitors in emissions technologies are:

  • Tenneco
  • Faurecia
  • Eberspaecher
  • Benteler.

Of the four, Tenneco Automotive (TEN) and Faurecia are publicly held, though both offer a wider range of automotive-related products in addition to emissions products. Donaldson and Cummins also offer competing products, with a greater emphasis on commercial vehicles.

Key competitors in roof systems include:

  • Webasto
  • Inalfa
  • Aisin

ArvinMeritor provides OEMs in North America and Europe with sunroofs and sunroof systems for cars, trucks, and SUVs.

Competitors in door systems include:

  • Brose
  • Intier
  • Kiekert
  • Valeo
  • Aisin
  • Grupo Antolin.

ArvinMeritor is a leading supplier of steel wheels for light- and medium-duty vehicles, which it designs, manufactures, and markets under the Fumagalli brand name. The company is one of a limited number of wheel manufacturers with the capability of producing steel wheels in a full range of sizes from 13 to 22.5 inches in diameter. Competing wheel suppliers include:

  • Hayes-Lemmerz
  • Topy
  • Accuride
  • CMW.

Chinese manufacturers, however, have also begun penetrating this market, pulling market share away from ArvinMeritor.

ArvinMeritor lags behind many of its competitors in earnings in relation to sales, or earnings margins, a measure of operational efficiency. However, it is important to note that most of its peers manufacture the entire vehicle or machine (or a major part of one, in the case of engine maker Cummins) as opposed to individual components or systems for the vehicle with lower profitability, as ArvinMeritor does. In the graph below, only Accuride, Eaton, and Tenneco focus on individual components as ArvinMeritor does.

References

  1. 1.0 1.1 ARM 2009 10-K pg. 1
  2. 2.0 2.1 ARM 2009 10-K "Selected Financial Data" pg. 27
  3. ARM 2009 10-K "Products" pg. 6-7
  4. ARM 2009 10-K pg. 1
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