TRW has exceeded expectations by reporting fourth quarter net earnings of USD141m or USD1.18 per diluted share, which compares to a net loss of USD946m or (USD9.35) per share in the prior year period.
TRW is the latest in a line of North America based Tier 1 suppliers to report improved results on the back of rising vehicle production.
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The firm reported the improvement against a backdrop of higher sales and profit margins compared with earnings a year ago when its results were dragged down by restructuring costs.
The results nevertheless exceeded analyst expectations.
“Our strong fourth quarter and full year results demonstrate that TRW not only survived the industry challenges in 2009, but has emerged as a stronger global franchise,” said John C. Plant, President and Chief Executive Officer.
“In the midst of the worst recession in recent memory, TRW was profitable on an operating and net income level, generated positive cash flow for the third consecutive year, reduced its net debt to the lowest level in the history of the Company and strengthened its capital structure by issuing new equity and extending debt maturities. The positive operating results combined with our strengthened balance sheet provide a strong foundation to continue support of our growth in the future.”
The company reported fourth-quarter 2009 sales of USD3.4 billion, an increase of USD571 million or 20.3 percent from the prior year period. Compared to the prior year, the 2009 quarter benefited from a higher level of sales in Europe and the rest of world resulting from increased vehicle production volumes in those regions. Currency movements during the quarter also had a positive impact on sales compared to the same period a year ago.
The company’s fourth quarter 2009 operating income was USD229 million compared with an operating loss of USD892 million last year.
TRW also reported 2009 sales of USD11.6 billion, a decrease of USD3.4 billion or 22.5 percent compared to prior year sales. The decrease in sales resulted from the sharply reduced global automotive production volumes between the two years and the overall negative effects of foreign currency movements compared to 2008.
Operating income in 2009 was USD419 million, which is a decrease of just USD45 million compared to the prior year result of USD464 million.
The company reported 2009 GAAP net earnings of USD55 million, or $0.51 per diluted share, which compares to a GAAP net loss of USD779 million, or ($7.71) per share in 2008.
2010 outlook
TRW’s 2010 planning assumptions for industry production volumes are approximately 10.8 million units in North America and 16.0 million units in Europe, up 27% and down 2%, respectively compared to 2009 levels. Based on these production levels and the company’s expectations for foreign currency exchange rates, full-year 2010 sales are expected to range between $12.3 billion and $12.9 billion, with first quarter sales expected to be approximately $3.4 billion.
The company currently expects that the continuing recovery in the North American market and the benefits achieved from downturn management actions implemented in 2009 will offset an increase in pension expense, rising commodity prices and other factors in 2010.
“We are optimistic the positive momentum that emerged in the industry in the second-half of 2009 will continue into 2010,” said Mr. Plant.
“As we start a new decade, TRW is well positioned to build on the success achieved in 2009 given its leading diversification, key technology portfolio and improved cost and capital structure.”
