USA: Delphi Earnings Increase 9 Percent to $148 Million in Third Quarter

By Press Release | 12 October 2000

Delphi Automotive Systems (NYSE: DPH) today reported third quarter 2000 consolidated earnings of $148 million, or $0.26 earnings per share, in line with analyst consensus estimates. This represents a 9 percent increase in earnings over the same period last year.

"We continue to see improved margins in our operations as we aggressively manage our portfolio, exiting more than $125 million of low-margin business in the third quarter," said Alan S. Dawes, Delphi Chief Financial Officer. "Additionally, Delphi Manufacturing System implementation continues to generate results as we utilize lean practices and improve capital efficiency at our manufacturing facilities worldwide."

Sales to customers other than General Motors rose to $2.0 billion, or 30 percent of total sales, representing a 15 percent increase over the third quarter of 1999 on a comparable basis. Net income margin reached 2.2 percent, up from 2.0 percent for the same period last year. Gross and operating margins also increased. Quarterly net sales were $6.6 billion, down 2 percent from the same period last year. Dawes attributed the sales reduction to exited businesses, price reductions, foreign currency fluctuations and a slight softening of new vehicle and aftermarket demand in North America and Europe.

"Today's results mark the seventh consecutive quarter since our IPO that we have achieved solid financial performance," said J.T. Battenberg III, Delphi chairman, chief executive officer and president. "We continue to deliver on the targets established at our independence to produce long-term value for our shareholders. We remain focused on targets of 5 percent net income margin by the end of 2002, year-over-year non-GM sales growth of more than 10 percent and return on net assets of 12.5 percent, while generating operating cash flow of $1.5-2.0 billion per year."

Aggressive Growth Initiatives

Growth in Delphi's Mobile MultiMedia (MMM) product line continued strong with $114 million in sales in the third quarter, representing a 777 percent increase over the third quarter of 1999, and a 97 percent increase over second quarter 2000 results. The previous target for 2000 MMM sales was estimated at $200 million, but based on higher than expected sales year-to-date, Delphi now anticipates the total could approach $300 million.

New Business

Delphi's customer-differentiating technologies continue to generate new business bookings. Major contracts* announced during the quarter include:

* Renault chose Delphi to provide advanced climate control technology for all versions of its next-generation Laguna model, expected to go on sale in Europe by early 2001. The expected lifetime value of the contract is more than $550 million.

* Jaguar selected Delphi's Passive Occupant Detection System (PODS), the first and only weight-sensing system of its kind to reach the market. This technology will be standard equipment on the 2001 Jaguar XK sports car series.

* Delphi won a contract to supply significant electrical wiring content to Volvo Truck Corporation in Europe. The programs include commercial trucks of 16 tons and greater, and have expected annual volumes in excess of 40,000 units.

* Volkswagen do Brasil selected Delphi to provide its Compact Variable Compressor for the VW Gol. The expected lifetime value of the contract is worth more than $40 million when full production is reached in 2002.

* Delphi will supply its E-STEER(TM) Electric Power Steering System to Volkswagen for its Lupo 3L TDI model, arriving in Europe this autumn.

Other Highlights

Delphi announced the formation of a majority-owned joint venture with Ashimori Industry Co., Ltd. to jointly pursue seat belt business growth. The venture will focus on new and existing opportunities in the North American, South American and European seat belt systems markets.

About Delphi

Multi-national Delphi Automotive Systems, with headquarters in Troy, Mich., USA, Paris, Tokyo and Sao Paulo, Brazil, is a world leader in mobile electronics and transportation components and systems technology. Delphi's three business sectors -- Dynamics & Propulsion; Safety, Thermal & Electrical Architecture; and Electronics & Mobile Communication -- provide comprehensive product solutions to complex customer needs. Delphi has approximately 216,000 employees and operates 184 wholly owned manufacturing sites, 44 joint ventures, 53 customer centers and sales offices and 31 technical centers in 40 countries. Delphi can be found on the Internet at www.delphiauto.com .