Indianapolis-based Allison Transmission Holdings Inc. predicted 2013 sales declines after it closed 2012 with an inflated $514.2 million annual profit and a massive slide in sales for a key market during the fourth quarter.
The Indianapolis Business Journal reported that full-year revenue for Allison dipped 1% to $2.14 billion. The $514.2 million profit for the year, which soared almost 400% from $103 million in 2011, had a lot of help from $298 million in tax benefits. The last quarter alone saw profits plummet 75% to $11.2 million.
Sales also dropped 5.6% in the fourth quarter to $487 million after business dropped off in one of Allison’s biggest markets.
Allison primarily makes automatic transmission for mid- and heavy-duty commercial and military vehicles, as well as motorhomes and hybrid-propulsion systems for city buses. The manufacturer also makes off-highway products such as farm and energy equipment.
The company said unfavorable natural gas pricing reduced demand for its North American off-highway products. The business segment’s sales dropped to $17 million in the fourth quarter from $70 million a year earlier.
A 7% sales increase, to $188 million, in the single largest market, North American on-highway products, offset some of the off-highway losses as other, smaller business areas grew.
But the company still has a gloomy outlook for 2013 and said it expected net sales to drop in the range of 6% to 8%.
Allison expects early 2013 to be the worst part of the year because of disappearing demand in the North American energy market, notably for the company’s hydraulic fracturing products.
Concerns about military cutbacks and weaker global demand for vehicles have fueled concerns.
“Given the continued heightened level of uncertainty in our end markets, we are taking a cautious approach to 2013,” Allison CEO Lawrence Dewey said in a prepared statement. “Consequently, we have implemented several initiatives to proactively align costs and programs across our business with the lack of near-term visibility and confidence in certain of our end markets.”