American Axle & Manufacturing Holdings Inc. said Friday it will further reduce its dependence on General Motors Co., announcing it is working to land $1.5 billion in potential new business that will come online over a three-year period starting in 2018.

The Detroit auto supplier, carved out of GM in 1994, will for the first time in its history count on the No.1 U.S. auto maker for 50% or less of its business starting in 2020, according to a new company projection. GM represented almost 70% of the company's $3.9 billion in revenue booked in 2015.

American Axle made the disclosure Friday along with fourth-quarter earnings that solidly beat Wall Street expectations. Shares traded up 21% to $14.17 in afternoon trading. Before Friday's session, shares had dropped 38% since the beginning of 2016.

The new business, announced by Chief Executive David Dauch, boosts the company's outlook after about a half-year of uncertainty. American Axle announced last year it lost a portion of the business associated with GM full-size pickup trucks that are set to debut in 2018.

American Axle has long been a supplier to GM's profitable pickup lineup, which is booming amid low gasoline prices and is expected to do well if oil prices remain low. Although American Axle will remain the top axle supplier for the redesigned pickups, 25% of that business will now go to a different supplier.

Mr. Dauch, speaking to analysts, said "the good news is that we're seeing an increase in customer quoting activity and are presently working on approximately $1.5 billion of new and incremental business opportunities." He said one-third of that falls in the 2018 time frame.

"These opportunities are geographically diverse and mostly non-GM as well," he said. "We are confident by 2020, American Axle's noncore business will be at or over 50% of total sales."

In a telephone interview, Mr. Dauch indicated a merger or acquisition could be in the cards this year. That would deepen the company's product portfolio, which currently includes axles, drivelines and electrical drive systems.

The company reported a $62.9 million net profit, or 81 cents a share, compared with $13.2 million in the same period a year ago. Revenue increased 2% to $958 million.

Analysts had expected earnings of 69 cents a share.

Write to Jeff Bennett at jeff.bennett@wsj.com

 

(END) Dow Jones Newswires

February 12, 2016 16:05 ET (21:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
American Axle and Manufa... (NYSE:AXL)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more American Axle and Manufa... Charts.
American Axle and Manufa... (NYSE:AXL)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more American Axle and Manufa... Charts.