(Adds details on other parts companies; updates share prices)
By Justin Hyde
DETROIT, Oct 18 (Reuters) - Auto parts maker Visteon Corp. on Friday reported a narrower third-quarter loss, but price concessions to former parent and largest customer Ford Motor Co. ran ahead of its attempts to cut costs.
The world's third-largest auto supplier also said more than 20 percent of its sales came from customers other than Ford for the first time, and that the ramp-up of new business will push earnings above Wall Street expectations next year.
Since its spinoff from Ford in 2000, Visteon has been in a near-perpetual state of restructuring as it struggles to get its costs in line with those of other parts manufacturers. It has shed 6,000 employees, sought higher-profit business from other automakers and fought price reductions demanded by Ford.
Visteon Chief Financial Officer Dan Coulson in a conference call on Friday said the company's net cost savings totaled about $70 million in the quarter. But Coulson also said Visteon's price reductions in the quarter were more than that.
Automakers have been pushing parts suppliers for ever-deeper price cuts to offset the withering of profit margins from cash rebates and interest-free financing propping up U.S. auto sales. Ford, which reported a $50 million loss at its North American auto business earlier this week, has vowed to step up its cost-cutting efforts.
Visteon on Friday said it was considering more restructuring in North America, on top of a restructuring plan under way in Europe aimed at cutting about 900 jobs.
MIXED RESULTS
Earnings results among other major parts makers have been mixed so far, with some able to ride the wave of higher vehicle production in North America.
Delphi Corp., the world's largest auto supplier, reported a 64 percent jump in quarterly profit earlier this week on higher production from General Motors Corp. and more sales to customers other than GM. Lear Corp., which makes electronics, seats and other interior parts, said its earnings rose nearly fourfold on stronger U.S. auto production and lower interest costs.
But Tower Automotive Inc. saw its shares plunge nearly 20 percent on Friday after its profits missed Wall Street expectations by 1 cent a share. The maker of vehicle frames and suspension parts said it earned $10 million, or 15 cents a share.
"Negative psychology has taken over as the primary driver (maybe even the sole driver) of Tower's stock price," said Robert W. Baird analyst David Leiker. "While results were a penny below estimates and at the low end of guidance, this was still a strong quarter."
Visteon's shares were down 39 cents, or 5 percent, at $7.19 in trading Friday on the New York Stock Exchange. Shares of both Visteon and Delphi have fallen about 45 percent since the start of the third quarter as investors worried about earnings at automakers and their suppliers if U.S. consumers ease off spending on new vehicles next year.
LOOKING ELSEWHERE
Visteon said it pared its third-quarter net loss to $52 million, or 40 cents a share, from $95 million, or 74 cents a share, a year earlier.
Excluding restructuring charges in each quarter, the company said it halved its operating loss to $35 million, or 27 cents a share, from $74 million, or 57 cents a share, a year ago. Visteon told analysts in July to expect an operating loss of between $30 million and $45 million.
The third quarter is traditionally the weakest for automakers and their suppliers as factories switch over to new models. But production at Ford was up 17 percent from last year as U.S. auto sales remained healthy.
Ford for the first time accounted for less than 80 percent of Visteon's revenue, which increased 17 percent to $4.3 billion. Sales to automakers other than Ford totaled $898 million, up 25 percent, while Ford revenue was up 13 percent.
Visteon said it has won business worth $900 million this year from a dozen automakers other than Ford, including Nissan , DaimlerChrysler and Volkswagen . It projected fourth-quarter sales of $4.6 billion and income of $15 million to $35 million excluding restructuring charges.
Visteon also said it would expense the market value of employee stock options beginning next year, which will reduce 2003 net income by about $5 million. The effect will increase to $15 million over the next three years.