Despite increased fourth quarter and full year net losses, Visteon has insisted its results exceeded earlier guidance and that its restructuring remains “on track”.
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For fourth quarter 2007, the former Ford parts unit reported a net loss of $43m, or $0.33 per share, on sales of $2.9bn. This compared with a net loss of $39m on sales of $2.8bn in Q4, 2006.
Visteon said sales to former parent Ford fell 10%, or $108m, to $960m, reflecting lower North American production volumes, divestitures, sourcing actions and product mix while sales to other customers increased 10%, or $154m, to $1.76bn and accounted for 65% of total product sales.
The Q4 2007 loss included $30m of non-cash asset impairments and $32m of restructuring expenses. But pre-tax earnings improved $52m to $15m.
“For the fourth quarter and full year 2007, Visteon delivered on the financial guidance we provided,” said chairman and chief executive officer Michael Johnston. “We continue to progress with our restructuring activities as planned, and have now completed 18 of the 30 items that are part of our three-year plan.”
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By GlobalDataFull year 2007
Visteon also reported a net loss – of $372m, or $2.87 per share – for full year 2007. The result included $107m of non-cash asset impairments and $32m of restructuring expenses.
In full year 2006 the company posted a net loss of $163m, or $1.27 per share, which included $22m of non-cash asset impairments.
It also posted a pre-tax loss of $49m last year compared with a $27m pre-tax profit in 2006.
This, Visteon said, primarily reflected lower customer volumes and unfavourable product mix, principally in North America, and the non-recurrence of 2006 benefits such as a relief of employee retirement benefit obligations and favourable commercial agreements, partially offset by “improved cost performance”.
Full-year sales were $11.3bn for both full-year 2007 and 2006. Product sales for the full year 2007 were $10.7bn, including favourable foreign currency of approximately $570m, which offset the impact of facility closures and divestitures.
During 2007, product sales to customers other than Ford increased 11%, or $674m, to $6.6bn and represented 61% of total product sales. Product sales to Ford in 2007 declined 14%, or $659m, to $4.1bn.
Restructuring
During the fourth quarter, Visteon completed the closure of a climate facility in Indiana and notified workers at an interiors facility in Bellignat, France, of its intention to close the facility during the first quarter of 2008.
The company also plans to “address” eight facilities this year, including closing its Bellignat, France, and Bedford, Indiana, facilities and selling its non-core chassis facility located in Swansea, Wales. Last month, Visteon said it would close the Concordia, Missouri, fuel tank assembly plant during the third quarter 2008.
“Upon completion of these items, 22 of the 30 facility restructuring actions included in the company’s three-year improvement plan will have been addressed,” Visteon said in a results statement.
On 1 February, it also announced the sale of its non-core North American-based aftermarket under-hood and remanufacturing operations, including a manufacturing plant in Tennessee and two facilities in Reynosa, Mexico.
New business
Visteon said it continued to win new business from a diverse group of customers across each of its core product lines. In full year 2007, the company had wins of nearly $1bn; about 25% in Asia and the balance in North America and Europe. In addition, the company’s non- consolidated affiliates won approximately $370m of business, primarily in Asia.
“Winning nearly $1bn for the second consecutive year demonstrates that our customers recognise the strength of Visteon’s product capability and our global engineering and manufacturing footprints,” said president and chief operating officer Donald Stebbins.
2008 outlook
Visteon expects pre-tax earnings for full year 2008 in the range of a $25m loss to a $25m profit on product sales of about $9.7bn.
“The progress Visteon is making, combined with what we will execute in 2008, lays the foundation for Visteon to be free cash flow positive in 2009,” Johnston said. “With almost $1.8bn of cash as of year-end 2007 and additional available liquidity, Visteon has flexibility to execute its plans.”
