US: TRW Q3 net earnings halve
TRW Automotive Holdings net earnings for the third quarter of 2006 halved to $5m or $0.05 per share, compared to $10m or $0.10 per share a year ago.
The specialist in active and passive safety systems boosted third-quarter sales 3.4% to $3.0bn, an increase of about 3.4% compared to the same period a year ago.
TRW said a higher effective tax rate in the current year contributed "significantly" to the decrease in earnings.
"The 2006 quarterly tax rate, which is significantly higher than the full year expected rate, was negatively impacted primarily by the company's geographic earnings profile in the quarter," it added.
"Despite a precipitously more difficult second half operating environment, we are on pace to post profitable operating growth in 2006 as we continue to benefit from our industry leading sales diversification and the underlying strength of our safety product portfolio," said president and chief executive officer John Plant.
"We've been successful at offsetting lower customer production in North America with higher product volumes in Europe, Asia and other parts of the world, which together represent 66% of our sales. However, the unprecedented level of recent production cuts by our major North American customers, along with other industry and operational pressures facing our business, have caused us to scale back our expected operating earnings growth for the year to more moderate levels."
Operating income for third-quarter 2006 was $82m, up from $73m a year ago. Lower restructuring and asset impairment expenses, savings from cost improvement and efficiency programmes, the inclusion of newly-acquired Dalphimetal and the resolution of patent-related matters contributed.
Restructuring and asset impairment expenses in the 2006 period were $3m compared to $35m in 2005.
For the nine months ended 29 September, TRW boosted operating income to $510m, up $90m, or 21% year on year on sales of $9.9bn, up 3.8%.
Year-to-date 2006 net earnings were $143m, or $1.38 per share, compared to $145m or $1.42 per share a year ago. Net earnings in both periods were impacted by special items, which were expenses of $57m in the 2006 period related to the Lucas bond tender transaction and net income of $10m in the 2005 period related to the combined effect of a one-time tax benefit and a loss on retirement of debt.
TRW has revised its full year guidance downward to account for expected lower customer vehicle production schedules and other factors in the fourth quarter.
Full year sales are now expected to be approximately $13.0bn (including fourth quarter sales of approximately $3.1 bn).
Net earnings per share are expected to be in the range of $1.25 to $1.50, which includes the $57m debt retirement expenses.
Earnings per share excluding this one-time item are expected to be in the range of $1.80 to $2.05.