ArvinMeritor sees weak fiscal 4th-qtr results

"In North America, we are encountering a weaker than anticipated economic environment in our Commercial Vehicle Systems business group resulting from decreased freight volumes largely due to the decline in housing construction," Chief Financial Officer Jim Donlon said in a statement.

"We are incurring premium freight and labor inefficiencies mainly in Europe, associated with unanticipated demand for higher production of truck parts, which is creating capacity issues for the entire supply chain," Donlon added.

Fiscal fourth-quarter results will be hurt by 20 cents a share due to these market conditions, and be reduced by another 20 cents a share for one-time items, the Troy, Michigan-based company said in the statement.

The one-time items are related to suppliers in financial distress and tax law changes in Germany.

"Our customers expect the housing recession to delay the recovery cycle for North America commercial vehicle production into the 2008 calendar year," said Donlon, adding that the company expects a recovery in late 2008.

ArvinMeritor expects fiscal 2008 earnings of $1.40 to $1.60 per share from continuing operations. Analysts, on average, have forecast earnings of $1.70 a share, according to Reuters Estimates.

The company expects its cost savings initiatives will help to mitigate the soft market conditions in fiscal 2008.

ArvinMeritor also said to maintain financial flexibility it has amended its revolving credit facility to modify certain covenants through the third quarter of fiscal 2008.

Shares of the company closed down about 1 percent at $16.73 Wednesday on the New York Stock Exchange.

(Reporting by Euan Rocha)