A one-off non-cash gain of US$95m related to the deconsolidation of net assets associated with the administration [bankruptcy] of Visteon UK boosted Visteon Corporation’s first quarter 2009 net income to $2m, or 2 cents per share, on sales of $1.35bn.
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This compared with the Q1 2008 net loss of $105m, or 81 cents per share, on sales of $2.86bn. Adjusted Q1 2009 EBITDA was $22m versus $166m a year ago.
“Our first-quarter results were significantly affected by the global reduction in vehicle production,” said chairman and CEO Donald Stebbins, chairman and chief executive officer.
Visteon said it was continuing to cut costs both in line with current market conditions and beyond those in the recently completed three-year improvement plan.
Additional cuts include previously announced global salaried and hourly workforce reductions, shortened work weeks, temporary reductions in pay, elimination of 401(k) pension plan matching contributions and merit increases, plus other measures.
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By GlobalDataSalaried employee cuts in the third quarter of 2008 reduced staffing costs by about $90m a year.
Visteon said 31% of first quarter product sales were to Ford while Hyundai–Kia accounted for 25% and Renault–Nissan and PSA/Peugeot-Citroen accounted for about 7% and 6%, respectively. On a regional basis, Europe accounted for about 38% of total product sales, with Asia representing 32%, North America representing 24% and the balance in South America.
On 31 March, 2009, administrators were appointed to Visteon UK leading to the deconsolidation of its assets from those of Visteon Corporation, the supplier said.
“The actions undertaken with respect to our UK operations were a difficult, but necessary, step to address a history of losses in these operations, and to support our goal of positioning Visteon as a competitive and viable company in this challenging environment,” said Stebbins.
First quarter 2009 total sales of $1.35bn, including product sales of $1.30bn and services revenue of $57m were down about about $1.44bn, or 53%, year on year as lower production, despite new business, reduced sales by about $1.1bn, Visteon said. Divestitures and closures and foreign currency further reduced sales by about $210m and $170m, respectively.
The company said it achieved lower sales in each of the major regions in which it operates, reflecting decreased production volumes by all customers as vehicle sales declined in response to weak global economic conditions.
Product gross margin for first quarter 2009 fell 77% to $44m compared with $194m for a year ago. The effect of lower production levels along with divestitures and closures more than offset savings from favourable net cost performance and restructuring activities.
Q1 selling, general and administrative expenses totalled $108m, a decrease of $40m, or 27%.
With regards to cash balances, Visteon said it remained in compliance with the requirements of the temporary waivers provided by its secured lenders, the earliest of which expires on 30 May, 2009, “and continues to work with both lenders and customers to seek a longer-term solution”.
Visteon increases UK redundancy payments
