Skip navigation
Newswire

UPDATE 4-Visteon posts wider quarterly loss, shares fall

(Updates share price, adds company comment)

By Justin Hyde

DETROIT, Oct 17 (Reuters) - Auto parts maker Visteon Corp. on Friday said its third-quarter net loss tripled over the same period a year ago, as production fell at largest customer Ford Motor Co. and a new union contract raised costs.

The loss was worse than Wall Street analysts had expected, sending Visteon's stock down more than 3 percent. It was the fifth straight quarter that Visteon reported a net loss, highlighting the pressure large auto suppliers face to cut costs and win new contracts.

Visteon, the second-largest U.S. parts maker, reported a net loss of $168 million, or $1.34 a share, compared with a net loss of $52 million, or 40 cents a share, in the third quarter of 2003. The company said the results included $41 million, or roughly 33 cents a share, for signing bonuses under its new contract with the United Auto Workers union.

Analysts had expected an operating loss of 82 cents a share on average, with a range of 63 cents to $1 per share, according to Reuters Research, a division of Reuters Group Plc. The estimates exclude the impact of the signing bonuses and a restructuring charge taken in the quarter of $1 million, or 1 cent a share.

Ford, which accounted for about 74 percent of Visteon's revenue, cut its North American production by 17 percent and its European production by 9 percent during the third quarter. Visteon said its total revenue fell 9 percent, to $3.9 billion.

"Third quarter was the lowest production level Ford has had in North America for many years," said Visteon Chairman Pete Pestillo in a conference call with analysts. "This, coupled with seasonally low production in Europe, put pressure on our third-quarter results."

In addition to the UAW costs, Visteon's spending on its computer systems rose by nearly $50 million, as the company began separating its computer systems from Ford, which spun Visteon off in 2000.

Visteon said it won more than $380 million in new business during the third quarter, bringing its total for the year to nearly $600 million. It affirmed a forecast for winning a total of about $1 billion in new business for all of 2003.

The company said "the near-term outlook continues to be challenging," but did not give specific earnings estimates. It said it expected stronger operating results in the fourth quarter than the third quarter, traditionally the weakest in the U.S. auto industry.

Shares of Visteon lost 23 cents to $7.02 in midday trading on the New York Stock Exchange.

Visteon's results came a day after Delphi Corp. , the world's largest parts supplier, reported a large loss for the third quarter and announced plans to cut 8,500 jobs over the next few years.

While Delphi, Ford and General Motors Corp. have all laid out plant closing plans in the wake of the new union contracts, Visteon said it saw no need to close factories.

"We've got enough work at all the places we've got," Pestillo said. "Nothing's standing out as a white elephant."

While Delphi and Visteon struggled in the third quarter, smaller parts companies that were more narrowly focused have posted better results. Lear Corp. , the No. 3 U.S. parts supplier, said on Friday its third quarter earnings rose 24 percent, as new global contracts for its interior business and the impact of the weak dollar offset lower North American production.