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October 18, 2004

USA: Delphi plans more cost cuts but sees Q4 sales meeting analyst estimates

Delphi Corp. on Monday indicated more cost cuts are coming due to a challenging market, but said that fourth quarter sales are projected to meet analyst estimates.

By bcusack

Delphi Corp. on Monday indicated more cost cuts are coming due to a challenging market, but said that fourth quarter sales are projected to meet analyst estimates.

“In the face of near-term headwinds, we are engaging our entire workforce in efforts to identify additional opportunities to defer non-critical sales, general and administrative and discretionary spending,” Alan Dawes, Delphi vice chairman and chief financial officer, said, according to CBS Marketwatch.

“We are also looking at creative solutions across the entire supply chain to reduce overall costs and counteract some of the commodity market-driven cost increases,” he reportedly said.

According to the report, Delphi, which spun off from General Motors in 1999, said it expects fourth quarter revenue of $US7 billion to $7.2 billion – in line with the average forecast from Thomson/First Call. Its 2004 revenue projection of $28.6 billion to $28.8 billion was also in line with the average forecast.

Delphi reportedly warned third quarter results would miss expectations due to higher commodity prices and as the parts maker saw lower production volumes from carmakers.

Its third quarter loss narrowed to $114 million from $353 million a year ago, or to 20 cents a share. Excluding restructuring charges, Delphi saw a pro forma loss of 12 cents – in line, it said, with the average analyst forecast and an October 5 update.

Revenue was $6.65 billion, up from $6.56 billion in the year-ago period. Non-GM revenue rose to 47% of third quarter revenue.

CBS Marketwatch said Delphi expects “to remain in line with our 2004 earnings trajectory in the fourth quarter.” It sees expects fourth quarter GAAP net earnings, including the anticipated impact of previously announced restructuring charges, from a loss of $18 million to positive earnings of $32 million

The company reportedly said on October 5 that it planned to limit hiring and reduce headcount through attrition to cut costs. On Monday, it reportedly said all production has ceased at the Flint West facility and all the remaining employees at the site have chosen to “either retire, flowback to General Motors or transfer to other opportunities within Delphi.”

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