Visteon, Delphi plan deeper cuts as Europe demand sinks
(Reuters) - Auto parts suppliers Visteon Corp (VC.N) and Delphi Automotive Plc (DLPH.N) said they were accelerating cost cutting as carmakers slash production in the face of slowing demand, especially in Europe.
Visteon, a former Ford Motor Co (F.N) subsidiary, reported on Thursday a nearly two-thirds slide in quarterly profit, while Delphi forecast fourth-quarter results below analysts' expectations.
Carmakers struggling with the European crisis and chronic overcapacity in that region are cutting plant capacity as hopes for a recovery recede.
Visteon would make cuts in Europe and close plants around the world, including one in the Philippines this quarter, Tim Leuliette, who took over as Visteon chief executive just over a month ago, said on a conference call.
The company already plans to sell some business but Leuliette said more is needed, beyond an already achieved 7 percent cut in costs from 2011 levels.
"There is more we can and must do," he said in a statement, as the company reported third-quarter revenue slid 15 percent.
Ford, which still accounts for almost a third of Visteon's sales, last week unleashed a new round of job cuts and plant closures in Europe in a bid to halt regional losses that the automaker now expects to top $3 billion over two years.
Visteon shares jumped 10.5 percent to $48.75 in opening trade on the New York Stock Exchange, before easing back to $46.90. Delphi shares fell 3.7 percent to $30.27.
The auto industry in Europe, which accounted for 30 percent of Visteon's sales in the third quarter, is in deep trouble.
Car sales in Europe fell at their fastest pace in 12 months in September, hurt by government spending cuts and rising unemployment.
Visteon forecast restructuring and other costs of about $100 million, beginning in the fourth quarter.
Delphi said it expects to incur costs of about $250 million from some restructuring programs the company being initiated in the fourth quarter.
The company expects to incur about $175 million of this in the quarter, and the balance in 2013. About 75 percent of the restructuring program costs are in Europe.
Visteon reported earnings attributable to the company of $15 million, or 28 cents per share, in the third quarter, compared with $41 million, or 79 cents per share, a year ago.
However, Delphi reported third-quarter earnings attributable to the company of $269 million, or 84 cents per share, ahead of Wall Street estimates of 73 cents per share.
It report benefits from previous cost cutting, with its costs falling 7 percent from a year ago.
Delphi's revenue fall of 6 percent, to $3.66 billion, was less than half the 15 percent fall suffered by Visteon, which reported revenue of $1.62 billion.
Hyundai (005380.KS) and its Kia (000270.KS) affiliate accounted for about 32 percent of Visteon's product sales in the quarter, followed by Ford.
Visteon, which only exited bankruptcy protection about two years ago, has been under pressure to break itself up from investors and board members, who argue that it is spread across too many businesses.
The company said previously announced plan to sell its climate control business to its South Korean joint venture partner, Halla Climate Control Corp (018880.KS), was on target.
Visteon also plans to exit the auto interiors industry by hiving off its standalone interiors unit as well as its 50 percent stake in a Chinese joint venture, Yanfeng Visteon. Visteon sold its lighting operations earlier this year.
(Editing by Anthony Kurian and Rodney Joyce)
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