Tecumseh Products Company announced results for its fourth quarter and full year ended Dec. 31, 2008.
"As the global economy slipped deeper into recession in the fourth quarter, the impact on our sales and margins was significant," said Ed Buker, chairman, president and CEO of Tecumseh Products. "Although the depth and speed of the downturn in the quarter was unexpected, we have taken decisive action to mitigate the effects of the recession on our results. Given that the global recession is expected to worsen in the near term, we must continue to be ready to take additional actions as required."
Consolidated sales in 4Q 2008 decreased by US$88.4 million, or 35.1% from 4Q 2007. Excluding the effects of foreign currency translation, which decreased sales by $23.7 million in the fourth quarter of 2008, sales declined by $64.7 million or 25.7%. Tecumseh said that the sales declines were felt most significantly in the household refrigeration and freezer applications, where sales were down $45.5 million or 55.7% when compared to 4Q 2007. Tecumseh said, "This decline represents the impact of numerous factors, most notably a decline in market demand. It was largely attributable to reduced access to consumer credit in many geographic locations where the company's business is concentrated, including India and Brazil, as well as lower housing starts on a global basis."
"Although we worked diligently to mitigate the impact of commodity and currency volatility through our hedging programs, these efforts proved inadequate in the face of the unprecedented market conditions of 2008," said James Nicholson, chief financial officer of Tecumseh Products. "The speed of the ascent and subsequent decline in prices for commodities in 2008 was historically unprecedented."
As part of its efforts to offset unfavorable market conditions, improve profitability and reduce the consumption of capital resources, Tecumseh said its plans for 2009 include additional cost reduction activities including, further employee headcount reductions, consolidation of productive capacity and rationalization of product platforms, and revised sourcing plans.
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