TRW – a supplier that has attracted M&A interest from ZF – has beaten expectations to report second quarter net profit up 7% to $265m.
The company’s upbeat results were helped by higher vehicle production in its major markets, string demand for safety technologies and favourable currency movements.
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Sales for the quarter were $4.6bn, an increase of 2% compared to the prior year period (up 8% excluding the effects of businesses exited, TRW said).
“TRW’s second quarter results reflect the Company’s focus and ability to capitalise on increasing global demand for its active and passive safety technologies,” said John C. Plant, Chairman and Chief Executive Officer. “TRW is well positioned to reach its full year goals given the Company’s strong operating performance achieved through the first half of 2014.”
TRW said its higher level of sales was driven by increasing demand for its active and passive safety technologies, higher vehicle production volumes in the company’s major markets, and the positive impact of currency movements between the two periods. That was partially offset by the negative impact related to exiting certain businesses within the company’s North American brake component and assembly operations.
The company’s second quarter 2014 operating income was $383m, compared with $385m in the 2013 period. Both the 2014 and 2013 periods included restructuring charges totalling $6m and $1m, respectively. Excluding these charges, operating income for the second quarter was $389m (margin of 8.5%), which compares to $386m (margin of 8.6%) in the prior year period. The year-to-year increase in profit was primarily driven by the higher level of sales, partially offset by planned increases in costs to support future growth.
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By GlobalDataTRW reported first half 2014 sales of $9bn, an increase of $308m compared to prior year sales. The higher level of sales was driven by increasing demand for TRW’s products, higher vehicle production volumes and favourable currency movements.
For the first half of 2014, the company reported operating income of $691m which compares to $638m of operating income in the prior year period.
The company reported first half 2014 GAAP net earnings of $464m, or $3.95 per diluted share, which compares to GAAP net earnings of $410m, or $3.28 per diluted share in the prior year period.
Company guidance on full-year 2014
TRW said it expects full year industry production volumes to total 17m units in North America and 19.9m units in Europe. Within the forecast for Europe, normal seasonality is expected to place modest downward pressure on vehicle production in the near-term despite continuing signs the industry in the region appears to be headed in the right direction. Outside North America and Europe, the company continues to expect expansion in vehicle production volumes in China whereas Brazil “remains challenged by negative economic conditions”.
Based on these production levels, the company’s first half performance and expectations for foreign currency exchange rates, full year 2014 sales are expected to range between $17.5n and $17.7bn, with third quarter sales expected to be approximately $4.2bn.
