"We achieved sales above last year's record levels and our continued focus on portfolio management, cost reduction and new business bookings produced another robust quarter," said Delphi Chief Financial Officer Alan S. Dawes. "Structural cost reductions helped us achieve year-over-year net income margin improvements in every quarter since our independence. In addition, new business bookings in excess of $5 billion indicate top-line growth and margin improvements in future years."
On sales of $7.8 billion, Delphi's earnings climbed 8 percent to $424 million from $394 million in the second quarter last year. Sales to customers other than GM rose to $2.2 billion, or 24 percent on a comparable basis. Net income margin grew to 5.5 percent from 5.1 percent for the same quarter last year.
For the first half of the year Delphi is on track to meet 2000 financial targets. Earnings for the first six months of 2000 rose 10 percent, excluding a one-time charge of $32 million in the first quarter, versus 1999 levels. Operating cash flow totaled $950 million, well on track for meeting the $1.5-$2 billion 2000 target.
"Since our IPO we've had six quarters of very solid financial performance. Delphi is consistently meeting the essential targets for delivering long-term value to our shareholders," Delphi Chairman, Chief Executive Officer and President J.T. Battenberg III said.
Manufacturing results improved in the second quarter due to implementation of lean initiatives. Delphi's Dynamics & Propulsion Sector reported the best rate of improvement with a 1.5 percentage-point gain in operating margin. The sector continued execution of a number of lean enterprise initiatives from turning around under-performing facilities to integrating Delphi Energy & Engine Management Systems and Delphi Chassis Systems into one unit now called Delphi Energy & Chassis Systems, an action that is expected to save more than $30 million in 2000.
Delphi's Dynamics & Propulsion Sector President Donald L. Runkle said: "As a result of our leadership in implementing common business processes and the Delphi Manufacturing System across the sector, Delphi's largest operating unit has shown that it can move fast and contribute to Delphi's success. Our consolidation is on track and as we continue to improve our cost structure and introduce high-tech products such as E*Steer, QUADRASTEER, common rail direct injection system, diesel engine management and MagneRide, we expect to capitalize on even more new business opportunities."
"In addition, exciting developments in fuel cells, non-thermal exhaust aftertreatment and 42-volt systems will bode well for our technology pipeline," he continued.
Also in the second quarter, Delphi executed several infrastructure reduction actions that are expected to save more than $25 million annually. These included the restructuring of Delphi South America staffs, planned workforce reductions at several European manufacturing locations and the use of contract support for several salaried activities at the world headquarters in Troy, Mich.
Aggressive Growth Initiatives
Delphi continued to accelerate through the start-up of its aggressive growth Mobile MultiMedia (MMM) product line. MMM sales leaped 625 percent to $58 million from $8 million in the second quarter of 1999, attributed primarily to sales of Delphi's telematics products.
"With over $3 billion in new business bookings this year for our Mobile MultiMedia products, we are beginning to realize the potential of our investments in engineering and research and development for this start-up business line. These products are in high demand," stated Delphi Electronics & Mobile Communication Sector President David B. Wohleen. "The industry is trending toward the use of more mobile communications products as well as more electronically enhanced products allowing us to achieve early leadership positions in several segments."
Delphi customers continued to embrace its products with more than $5 billion in new business bookings. New business bookings by customers other than General Motors were $2 billion, 36 percent of the total, for the second quarter.
Major contracts* announced during the quarter included:
The contracts for the quarter brought year-to-date business bookings to $12 billion.
During the quarter, Delphi celebrated one year as a fully independent company and, on May 10, held its first annual shareholders meeting in Kokomo, Ind. Delphi also announced in the second quarter the election of Patricia C. Sueltz, senior vice president of Sun Microsystems and head of the Sun Software Products and Platforms Division, to its board of directors. The board now includes 13 members; ten are outside directors and three are inside directors.
Multi-national Delphi Automotive Systems, with headquarters in Troy, Mich., USA, Paris, Tokyo and Sao Paulo, Brazil, is a world leader in mobile electronics and transportation components and systems technology. Delphi's three business sectors -- Dynamics & Propulsion; Safety, Thermal & Electrical Architecture; and Electronics & Mobile Communication -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 216,000 employees and operates 179 wholly owned manufacturing sites, 41 joint ventures, 53 customer centers and sales offices and 31 technical centers in 39 countries. Delphi can be found on the Internet at www.delphiauto.com .