Visteon Shares Drop as Auto Supplier Warns of Lower Results

Shares of Visteon Corp., the nation's second-largest auto supplier, dropped sharply Friday following a warning from the company that second-half results would be significantly below previous forecasts. Dearborn, Mich.-based Visteon said Thursday evening that lower vehicle production at Ford Motor Co., its biggest customer, and other factors such as higher steel and fuel costs had prompted it to withdraw a prior forecast for full-year earnings of $75 million to $110 million, or 60 cents to 90 cents a share. The company offered no further guidance.

From Associated Press via MEMA Industry News

DETROIT — Shares of Visteon Corp., the nation’s second-largest auto supplier, dropped sharply Friday following a warning from the company that second-half results would be significantly below previous forecasts.

Dearborn, Mich.-based Visteon said Thursday evening that lower vehicle production at Ford Motor Co., its biggest customer, and other factors such as higher steel and fuel costs had prompted it to withdraw a prior forecast for full-year earnings of $75 million to $110 million, or 60 cents to 90 cents a share. The company offered no further guidance.

In afternoon trading Friday on the New York Stock Exchange, Visteon shares were off $1.15, or 12.7 percent, to $7.85.

Visteon also said it would take a non-cash charge of $825 million to $900 million in the third quarter to write down deferred tax assets, which it attributed to Ford’s decision to cut planned production in the fourth quarter.

Ford said earlier this month it plans to build 830,000 vehicles in the fourth quarter, down from 900,000 in the year-ago period.

Visteon, a former unit of Ford that spun off from the automaker four years ago, counted on Ford for 72 percent of its business in the first half of 2004, said Visteon spokesman Jim Fisher.

Visteon, coming off two years of losses, has been undergoing constant restructuring since its departure from Ford, and it has tried to diversify its customer mix.

In a statement, Visteon president and chief executive Mike Johnston said the company recognizes the need to take aggressive action to become successful “in an uncertain market.”

“Our top priority over the coming months will be to explore and pursue strategic and structural changes to our business to achieve a sustainable and competitive business,” Johnston said. “These changes will involve Ford and our legacy businesses.”

Johnston didn’t provide specifics.

Visteon said it also may write-down certain fixed assets in the second half of 2004.

In a research note Friday titled “VC Throws In the Towel; So Do We,” Credit Suisse First Boston analyst Chris Ceraso slashed his 12-month target price for Visteon shares from $11 to $5.

“Thursday’s announcement deflates (almost) all expectations that 2005 profitability will be sufficient to deliver positive stock price performance,” Ceraso said.

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