Auto supplier Dana Inc. said net income rose strongly in the second quarter, offset somewhat by currency headwinds, customer demand volatility and supply chain disruptions.
The company said in a call with investors Friday that net income climbed $22 million to $30 million in the second quarter, a strong showing but not quite a full recovery to the $45 million posted in 2021. Dana primarily produces axles and transmissions.
Gains were offset by inefficiencies due to the translation of foreign currencies to U.S. dollars, which was a headwind to sales, profit and margin, and also by customer order volatility.
“While we still experienced some lingering customer driven production inefficiencies, our profit improvement was driven by lower net manufacturing costs, strong operational execution and the timing of EV investments,” Dana CFO Timothy Kraus said.
Dana’s revenue rose 6 percent to $2.75 billion, a gain attributed to higher market demand, cost-recovery actions and conversion of the company’s sales backlog. Free cash flow was down 19.8 percent to $134 million as a result of higher capital spending for new business backlog.
Adjusted earnings before interest, taxes, depreciation and amortization rose $81 million to $243 million.
Executives reaffirmed Dana’s commitment to evolving the electrified side of the company. Organic sales growth from EV products was $36 million, compared with $59 million last year.
“Our electrification business remains profitable on a contribution basis, but we can only show negative profit and margin when we factor in continued investment we are making to bring EV business up to scale,” Kraus said.
Dana also announced that it would be supplying “Rigid Beam E-axles for a highly anticipated light and medium duty truck program,” though Dana CEO James Kamsickas said he was unable to name the North American customer.
“It is another great example of how the transformation to electrification is providing Dana the opportunities to supply three times the vehicle content versus traditional ICE drive lines on programs big and small,” Kamsickas said.
Dana shares were up .58 percent to $18.92 in afternoon trading on Friday.
Dana Inc., based near Toledo, Ohio, ranks No. 29 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $3.05 billion in 2022.