Automotive component maker Delphi Corporation has reported a 64% year-on-year increase in earnings for the third quarter 2002 as the company benefited from a 3.5% increase in sales revenue while operating at a lower breakeven point due to the impact of restructuring plan savings, material cost reductions and improved margins on new business.
The growth was primarily driven by stronger than expected non-GM sales that rose 19% above year ago levels, in part reflecting the strengthening of the euro. Sales to GM met expectations for the quarter.
Revenue of $6.4 billion was up 3.5 percent from $6.2 billion in Q3 2001 while non-GM revenue accounted for 37% of total revenue for the quarter at $2.4 billion (up 19% from $2 billion in Q3 2001).
Net income of $54 million was up 64% from $33 million in Q3 2001.
“Our improved margins demonstrate our constant effort to reduce operating costs through structural cost reduction initiatives, material cost savings and benefits from our restructuring initiatives in a magnitude sufficient to more than offset rising pension and health care costs and continued price pressure,” said Delphi chief financial officer Alan Dawes.
To date, Delphi has completed over 90% of its 2002 plan that called for the reduction of 6,100 positions through consolidation activities at over 24 facilities in North America and Europe by March 2003.
In a statement Delphi said it had tightened financial targets for its instrument business as it continued negotiations with several bidders to sell the business.
“Any sale must be equal or better than our next best alternative,” the statement said.
Dawes said Q4 2002 revenue and earnings are expected to increase on a year-over-year basis, marking the fourth consecutive quarter of increases.
“Revenue is expected to range between $6.7 billion and $6.8 billion in the fourth quarter and net income is expected to be between $105 and $120 million, with earnings per share between $0.19 and $0.21. Operating cash flow is forecast between $275 and $350 million,” he said.
“We expect the difficult market conditions experienced in the first three quarters of 2002 to persist in the fourth quarter,” added Dawes.
Delphi’s 2002 calendar year revenue is anticipated to be in the $27.2 to $27.3 billion range, and net income between $502-$517 million, excluding the Q1 2002 special charge of $174 million after tax for restructuring.