Visteon Projects Profit After Losses

Visteon Corp. expects to earn a small net profit this year after losing at least $1.6 billion from 2001 to 2003, executives said Thursday. If Visteon turns a profit this year, it would be the first since 2000, the year the auto parts maker separated from Ford Motor Co. In a briefing for Wall Street analysts in conjunction with the North American International Auto Show, Visteon laid out its financial expectations for the first time in at least a year.

by Jamie Butters
Free Press Business Writer

DEARBORN, MI — Visteon Corp. expects to earn a small net profit this year after losing at least $1.6 billion from 2001 to 2003, executives said Thursday.

If Visteon turns a profit this year, it would be the first since 2000, the year the auto parts maker separated from Ford Motor Co.

In a briefing for Wall Street analysts in conjunction with the North American International Auto Show, Visteon laid out its financial expectations for the first time in at least a year.

The Dearborn, Mich.-based supplier said it expects to report a net loss of $1.13 billion to $1.25 billion for 2003 — $780 million to $900 million in the fourth quarter alone — before earning $65 million to $130 million this year.

Ford’s former parts division has struggled with high wages — about $25 an hour, plus benefits — for UAW members, who technically remain Ford employees leased by Visteon.

At the same time, Ford, which accounts for 77 percent of Visteon sales, lost substantial share of the U.S. market and cut production by about 11 percent in 2003 alone.

“It’s certainly been a tough road,” chairman and CEO Peter Pestillo said, noting that most of Visteon’s communication with Wall Street has been “admittedly bad news.”

But the company has changed significantly in recent years, restructuring its European business and marketing operations and boosting sales to customers other than Ford to about $4 billion this year and an expected $5.1 billion next year.

Last month, it renegotiated its 2000 spin-off, getting Ford to absorb almost $1.7 billion in health-care liabilities, pay for half of Visteon’s $200-million information technology system and pay its bills sooner for a few years, among other items. In exchange, Visteon paid $150 million to Ford as a price cut and promised steeper price cuts in the future.

This quarter, Visteon expects to complete its negotiations with the UAW to pay significantly lower wages to new hourly employees as it gradually returns current UAW members to Ford.

“Let me assure you, we are poised to grow and finally able to compete,” Pestillo said.

Visteon lost $470 million in 2001 and 2002 combined and $350 million through three quarters of 2003. The expected $780 million to $900 million loss in the fourth quarter includes $700 million to $800 million in charges for tax accounting, write-downs of poorly performing business lines and other restructuring charges.

Analysts expected Visteon to lose about $5 million this year, but Visteon’s announcement that it plans to earn $65 million to $130 million did not significantly boost the stock price.

Visteon shares rose a penny to close at $11.31, close to the 52-week high of $11.50.

Last year, Visteon executives refused to say what they expected the company to earn or lose — a rare step for a Fortune 100-size company.

Visteon expects total sales to grow by $1 billion this year to $18.6 billion, due to new non-Ford business, such as providing headlamps and other parts for the 2005 Chevrolet Corvette.

Visteon was dealt a blow Thursday when Delphi Corp. announced at the Consumer Electronics Show in Las Vegas that it would begin supplying satellite radios for 2006 model Ford pickups, business Visteon has now.

But Visteon was able to announce this week that it won satellite radio business with Nissan Motor Co., although it can’t say on what vehicles.

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