Auto parts-maker Dana Corp. said Monday that it will restate its earnings for the last six quarters to fix improper accounting and will withdraw its profit forecast for 2005.
The announcement sent its stock tumbling for the second time in a month. Shares sank $3.15, or 34 percent, to $6.04, on the New York Stock Exchange.
It was the stock’s biggest drop in at least 25 years, according to Bloomberg News. The shares’ previous 52-week low was $8.79, and they have lost half their value since mid-September.
Dana said the restatements for all of 2004 and the first two quarters of 2005 stem primarily from improper accounting for issues involving customer pricing and its commercial vehicle business.
The company said that it “has not completed its investigations,” and that it “believes there are material weaknesses in its internal control over financial reporting.”
This comes just weeks after Dana said it was cutting its profit outlook for this year in half.
“Less than a month ago, they made an earnings revision, and now they’re taking it completely off the table, which points to a management team that is trying to get its arms around what’s going on in the business.” said Brett Hoselton, a KeyBanc Capital Markets analyst in Cleveland.
“Things are going to get worse before they get better. In their commercial business, they have had supplier issues and higher costs, and the second issue they face is that they are not as profitable as they used to be.”
Dana, which had reported profit of $82 million for 2004, did not say how much earnings will be affected. It also will delay its third-quarter earnings announcement, which was scheduled for this week.
Representatives of the company could not be reached for comment.
The announcement is another blow to the struggling auto-parts-supplier industry.
Delphi Corp., the nation’s largest auto supplier, filed for bankruptcy Saturday and is expected to cut jobs and close some of its 31 U.S. plants. It has about 13,000 workers in Ohio at plants in Dayton, Warren, Sandusky and Columbus.
The FBI and the Securities and Exchange Commission have been investigating Delphi’s accounting practices for several months. Delphi restated its earnings for the last five years after conducting an internal investigation.
Last month, Dana’s stock fell 23 percent after announcing it was cutting its profit forecast for the year. The company’s shares have been as high as $18.59 during the past 52 weeks.
Dana, which makes brakes, axles and other parts, has said that soaring energy and steel costs were to blame for cutting in half its profit outlook for this year.
The company said last month that it would be making significant changes to improve its financial performance.
