Growth in sales to customers other than former owner Ford, plus favourable currency exchange rates, helped Visteon Corporation to second quarter 2004 net income of $US31 million, or $0.24 per share, a gain of $198 million, or $1.57 per share, compared to the net loss of $167 million, or $1.33 per share, in the second quarter 2003.
Second quarter results include after-tax special charges of $3 million in 2004 and $170 million in 2003.
Visteon reported income before income taxes of $55 million for the second quarter 2004, included in these results were pre-tax special charges of $5 million and $11 million pre-tax expense related to debt extinguishment.
In the second quarter of 2003, Visteon reported a loss before income taxes of $256 million including $266 million of pre-tax special charges.
Revenue for the second quarter 2004 was $4.9 billion, up $257 million from second quarter 2003. The increase, compared to a year ago, reflects primarily growth in non-Ford revenue and favourable currency translation, partially offset by lower Ford North American production volumes, the exit of Visteon’s seating operations and price reductions to customers.
Non-Ford revenue totalled $1.4 billion for the quarter, up 35% or $358 million compared to the second quarter 2003. Non-Ford revenue in the second quarter represents 28% of total sales, a 6% improvement from a year ago.
“We’re pleased with our second quarter results, especially the continued diversification of our customer base,” said Visteon chief executive officer and president Mike Johnston.
“We will be aggressive in the continuation of our cost-reduction and process improvement actions in the second half to ensure our competitive position.”
H1 revenue was $9.8 billion, increasing $525 million from a year ago. Ford revenue decreased $185 million to $7.1 billion for the first half of 2004, reflecting lower Ford North American production, the exit of the Chesterfield seating operations and price reductions granted to Ford, partially offset by favourable currency, increased European production and incremental business with Ford. Non-Ford revenue increased $710 million, or 35% to $2.7 billion, due primarily to increased business with non-Ford customers.
For the first six months of 2004, Visteon recorded net income of $61 million or $0.48 per share, including $10 million, or $0.08 per share of special charges. For the first six months of 2003, Visteon reported a net loss of $182 million, or $1.45 per share, included in these results were special charges of $190 million, or $1.51 per share.
Income before taxes was $111 million for the six months of 2004, including $16 million of pre-tax special charges and $11 million of pre-tax expense related to debt extinguishments. For the first half of 2003, Visteon reported a loss before income taxes of $275 million, including $297 million of pre-tax special charges. The increase reflects lower pre-tax charges of $281 million, increased profits from new business, lower employee retirement benefit and selling and administrative expenses, partially offset by other wage and raw material cost increases and expenses related to debt extinguishment.
Cash and liquidity
Visteon ended the quarter with $1 billion in cash and marketable securities. Cash flow from operations was $247 million for the second quarter and $352 million for the first half of the year, which reflects an improvement of $223 million and $463 million, respectively, compared to the same periods last year. Increased profits and the company’s continued focus on working capital were major contributors to this improvement.
Capital expenditures were $172 million for the second quarter and $370 million for the first half of the year. This compares to $222 million for the second quarter and $403 million for the first half of 2003. Quarter-end debt outstanding was $1.9 billion. Visteon’s debt-to-capital ratio was 51%.
Third quarter and full year 2004 outlook
Visteon’s revenue for third quarter 2004 is projected to be in the range of $4.0 to $4.1 billion, up from $3.9 billion in 2003, reflecting primarily non-Ford revenue growth. Visteon expects a third quarter net loss of $90 million to $105 million, or $0.70 to $0.80 per share.
Full year revenue is expected to be between $18.6 billion and $18.8 billion in 2004. Non-Ford revenue is expected to increase more than $1.0 billion from year ago levels. Visteon expects net income of $75 to $110 million for full-year 2004, or $0.60 to $0.90 per share. Full year 2004 projected results include anticipated pre-tax special charges of approximately $50 million.
Visteon expects cash flow from operations to be modestly higher than capital spending for the full year. Visteon’s third quarter and full year 2004 estimates are based on third quarter Ford North American production of 755,000 units and full year production of 3.65 million units.