From Detroit Free Press
DEARBORN, MI — Auto-parts maker Visteon Corp. said Thursday that it turned a quarterly profit for the first time since mid-2002 and surpassed earnings expectations, largely due to new business from the automakers and lower health-care costs for employees.
The Dearborn, Mich.-based supplier reported first-quarter net income of $30 million, or 23 cents a share, compared with a loss of $15 million, or 12 cents a share, in the same quarter a year ago.
The latest quarter includes a restructuring charge of $7 million, or 5 cents a share, for workforce reductions in Europe. The first quarter of 2003 included charges of $20 million, or 16 cents a share, for job cuts in North America and Europe.
Revenue for the first quarter was $5 billion, up $268 million from the first quarter of 2003. Sales were boosted by new business from non-Ford customers, which included a climate control supply contract for the Chevrolet Equinox.
Visteon also benefited from lower health-care and life insurance expenses for retired employees. The recent Medicare prescription drug bill lowered costs by $5 million in the first quarter, the company said.
Ford Motor Co. also agreed in December to take back $1.65 billion of Visteon’s future retiree benefits, which also lowered the company’s post-retirement health-care costs by another $5 million in the quarter. Ford spun off Visteon in 2000.
John Casesa, an analyst with Merrill Lynch, said it was a better-than-expected quarter.
“A few repeats may help part the clouds,” he said in a note to investors.
Visteon’s results exceeded the Wall Street consensus estimate of 13 cents a share and beat the guidance the company offered in January, which was between 5 cents and 15 cents a share.
Shares rallied following the news. Visteon closed Thursday at $11.45, up 87 cents, or 8 percent, on the New York Stock Exchange.
The company hadn’t posted a profit since the second quarter of 2002, when it made $72 million. Visteon has been losing money because it has been paying its workers the same lucrative wages as its former owner, Ford, which puts it at a disadvantage with other suppliers. Restructuring actions over the past few years has also eaten away at Visteon’s profit.
The automaker is Visteon’s largest customer.
The company hopes to resolve the labor cost problem with a two-tier wage system, which would allow it to pay new hourly workers less than current employees. The deadline for its UAW negotiations was late March, but the two sides agreed to an extension.
During a Thursday conference call, Visteon Chairman and CEO Peter Pestillo said the company has been meeting with the UAW and the two sides will reach a settlement soon.
“Both sides recognize the importance” of an agreement, Pestillo said. “The point is to do it right, not fast.”
Visteon expects second-quarter sales between $4.7 billion and $4.8 billion and net income of $13 million to $25 million, or 10 cents to 20 cents a share. The consensus estimate for the second quarter is 22 cents a share.
Officials also said they are close to filling its chief financial officer job. Former CFO Dan Coulson retired earlier this month.
Copyright 2004 Detroit Free Press. All Rights Reserved.
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