Visteon reportedly may be forced to lower its earnings guidance substantially following Ford’s reduction of its fourth-quarter production target on Wednesday.

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According to a CBS Marketwatch report, the Prudential Equity Group said – before Ford’s announcement – that it expected that Visteon could soon lower its 2004 earnings forecast of 60 cents to 90 cents by a full 24 cents.


Visteon’s current earnings projection reportedly reflects an assumption that fourth-quarter vehicle production would rise 4% at Ford, its main customer. However, the carmaker said it now plans to manufacture 830,000 vehicles during the quarter, down nearly 8% from the 900,000 units built in the fourth quarter of 2003.


Prudential had projected that Ford’s quarterly output actually would fall by 6%, CBS Marketwatch said, adding that Ford’s August US vehicle sales dropped 13% from year-ago levels to 271,394 cars.


Although Visteon has made “great strides” in diversifying its revenue streams to include customers other than Ford, Prudential reportedly said, “the bulk of its sales still come from Ford, and therefore the earnings of the company are still largely dependent on the production volume of its former parent.”

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The company’s non-Ford revenue represented 28 percent of total revenue in the second quarter, up from 22 percent in the year-earlier period, CBS Marketwatch said.


The research firm reportedly reiterated an “underweight” rating for Visteon. “We are concerned with Ford’s ability to hold onto North American market share (Ford buys over 70% of Visteon’s output) and with Visteon management’s ability to achieve its promised cost savings,” Prudential said.