Safety systems specialist TRW Automotive Holdings has posted a third-quarter net loss of US$54m or -$0.53 per share, compared with a net profit of $23m or $0.22 per share a year ago. Sales rose 2.8% to $3.6bn.
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TRW said Q3 sales benefited from currency movements and increased module sales but not enough to provide a corresponding benefit to earnings.
In any case, core product sales were sharply lower and other negative factors included higher restructuring charges, raw material costs and tax expense despite a loss before income taxes.
“TRW’s third quarter results reflect the unprecedented challenges facing the automotive industry and global economic markets in general,” said president and CEO John Plant.
Operating income for the third-quarter was $12m compared with $95m in the prior year period.
The key reasons were lower sales and a negative sales mix including a decline in higher margin core product sales replaced by lower margin module sales.
Restructuring charges and asset impairments totalled $32m compared to $13m a year ago.
For the nine-month period to 26 September, 2008, TRW reported sales up 12.6% to $12.2bn due to positive currency effects and above-trend sales of lower margin modules.
But higher product volumes related to new product growth and robust industry sales in some overseas markets during the first nine months of the year were offset completely by the continued decline in North American and western European vehicle production and price reductions provided to customers.
Operating income for the nine-month period fell 10.7% to $424m. This was due to a number of factors including a $32m increase in the level of restructuring and asset impairment expenses.
Outlook
TRW expects full year sales of about $15.3bn and net earnings per share in the range of $0.90 to $1.10.
“The company continues to evaluate other actions that may be necessary in reaction to the current environment, which will most likely lead to additional restructuring charges and asset impairments that are not incorporated in the guidance provided,” it noted.
“Our 2008 guidance reflects the challenges facing the automotive industry and TRW, most notably the rapid decline and change in mix of vehicle production schedules of our customers,” said Plant.
“At this point, we are planning for a difficult 2009 year with vehicle sales below 2008 levels in both Europe and North America.”
