Visteon: Profit, restructuring for European operations

Visteon Corp. swung to a second-quarter profit, and the company announced a major restructuring of its European manufacturing operations to improve its cost base and win new business. The auto-parts m…

Visteon Corp. swung to a second-quarter profit, and the company announced a major restructuring of its European manufacturing operations to improve its cost base and win new business. The auto-parts maker, a former unit of Ford Motor Co., said at the end of July that it plans to take total pre-tax charges of up to US$ 150 million related to the restructuring, of which US$ 80 million to US$ 95 million is expected in the second half of 2002. For the latest quarter, Visteon reported net income of US$ 72 million, or 56 cents a share, compared with a year-earlier net loss of US$ 40 million, or 31 cents a share. Results in the year-earlier period included a US$ 100 million restructuring charge. Excluding that item, the company reported year-earlier earnings of US$ 60 million, or 46 cents a share. The latest results were in line with the company“s raised June forecast for earnings of US$ 70 million to US$ 75 million. Sales in the latest quarter rose 2.7% to US$ 5.04 billion from US$ 4.91 billion a year earlier. Non-Ford sales grew 9% to more than US$ 900 million and represented 18% of total sales, the company said. Under the European restructuring plan, Visteon said it and the company“s unions in Europe have committed to restructuring actions of manufacturing operations in the UK, Germany and France. The plan seeks to improve the company“s cost base in Europe, allowing it to be more competitive and improve financial results in the future. The company said it will implement the plan in the second half of 2002. The plan is expected to generate ongoing annual pre-tax savings of about US$ 100 million by 2004. Looking ahead, the company said it expects to post a third-quarter loss of US$ 30 million to US$ 45 million, excluding items, based on seasonally lower volumes for the current period. The auto-parts maker also anticipates a full-year net loss of US$ 310 million to US$ 350 million, which includes previously announced and new restructuring actions as well as the first-quarter write-off of goodwill. In June, Visteon said it expected to post a full-year net loss of US$ 259 million to US$ 289 million, including the first-quarter item. During a conference call, Mr. Pestillo said the company could use its European turnaround plan as a model for restructuring its US operations. Visteon said the European restructuring includes voluntary separations and resourcing of product and productivity.