Visteon expects $1.2 billion loss in second quarter
Monday, August 8th 2005, 10:34 am
By: News On 6
VAN BUREN TOWNSHIP, Mich. (AP) _ Auto-parts maker Visteon Corp. on Monday said it expects to report a loss of $1.2 billion for its second quarter after writing down the value of assets being transferred to former parent Ford Motor Co. in a deal struck in May, while also reducing the value of certain international assets.
The company reported a preliminary loss of $1.2 billion, or $9.49 per share, on sales of $5 billion for the quarter. As announced last week, the company said it is reviewing the accounting for certain transactions that originated in its North American purchasing operations, and therefore these figures are subject to adjustment.
While it still does the bulk of its business with Ford, Visteon said sales to other customers rose to $1.8 billion, or 36 percent of total sales. Sales to Ford decreased more than 7 percent to $3.2 billion, primarily reflecting lower production levels in North America and Europe.
``Ford will remain our largest customer, representing about 50 percent of our total revenue, and we will still be Ford's biggest supplier,'' Mike Johnston, chairman and chief executive, told industry analysts during a teleconference. ``But we'll be less dependent on Ford and they will have the opportunity to diversify their supply base, allowing for improvements from suppliers who specialize in products that are not Ford or Visteon.''
He also said ``Visteon will become a leaner organization,'' focusing on increasing its cash flow and reducing its debt.
``Our goal for Visteon is value creation for our customers and for our shareholders,'' Johnston said.
Visteon is recording a charge of $900 million as it reduces, to estimated fair value, the carrying value of fixed assets related to the 24 facilities being transferred to Ford. In May, Ford agreed to assume control of 20 plants in the United States and four in Mexico, while absorbing more than 17,000 Visteon workers. Visteon also recorded a charge of about $250 million in the second quarter to write down certain noncore fixed assets, primarily in Europe, related to drive-line and engine air fuel systems.
Visteon, based in Wayne County's Van Buren Township, said that besides the charges, results for the second quarter were hurt by lower production at Ford and lower prices for its parts, offset somewhat by funding from Ford under an agreement reached in March.
``Over the years, we've made significant progress in a number of initiatives, but our financial performance has been hampered by declining revenue from our largest customer and an inflexible cost structure,'' Johnston said.