Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Andrew Deangelis – Keybanc Capital Markets.
Andrew Deangelis – Keybanc Capital Markets
On FY09 guidance. First of all, looking at the various segments incorporated within that guidance, I was wondering if you could flesh out what you expect North America and Asia to do specifically, incorporated within that guidance range.
Brad Richardson
I can speak qualitatively, I’m not going to provide specific segment guidance. What we’re expecting clearly with North America. If you kind of sort through all of the underlying restructuring, repositioning, inefficiencies, we are expecting the North America business to improve. You would expect that given the moderate improvement that we’re seeing in the build rates in the North American truck business.
Having said that, clearly the North American business is facing some headwinds around the commodity prices, in particular on the steel cost. But again underlying North America, we’re seeing the turn in that business with improvement. It is as Tom mentioned and as I mentioned in my prepared remarks that the OE business specifically in Asia, specifically related to Korea is projected to actually decline.
And this is because of, we’re currently working with a customer, trying to resolve some commercial issues, the primary customer for that business and we clearly have a lot of work to do on the manufacturing costs in order to arrest what is a deterioration in the Modine Korea performance.
Andrew Deangelis – Keybanc Capital Markets
Also you had mentioned a moderation in the European profitability during FY09, I’m just wondering what is your expectation around that?
Brad Richardson
I think Europe as you know has done very, very well, you can see it from the segment performance and we’ve been very, very pleased but what we’re assuming again is a moderation to flattening if you will of the performance out of Europe in our fiscal 09.
Andrew Deangelis – Keybanc Capital Markets
What do you guys expect the commodities impact to be during FY09 incorporated within the guidance.
Brad Richardson
It is included. I mean the impact of the commodities is included in the guidance. We’re assuming $3.80 copper, $1.35 aluminum and $12.50 for nickel. Certainly if you look at year over year, the change in the performance of the company, copper was high last year, we’re expecting it to remain high again this year.
So it’s not a huge factor in the year over year, it is the aluminum that is up $0.10 to $0.15 a pound and so we do have and we’re very pleased with the hedging activity that we have in place. There probably is a negative impact on the year over year guidance of about $5 million.
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