(Adds CEO, CFO comments, details, stock action, byline)
By Ben Klayman
DETROIT, July 31 Delphi Automotive Plc
reported stronger-than-expected second-quarter profit on
Thursday, but offered a forecast for the third quarter that
could fall short of analysts' expectations, and shares fell 0.4
percent in morning trading.
The auto supplier said it would restructure in South
America, where revenue slumped 24 percent in the second quarter.
"The macro environment in South America just continues to
deteriorate," Chief Executive Rodney O'Neal said on a conference
Delphi expects a third-quarter profit excluding one-time
items of $1.10 to $1.18 a share on revenue of $4.2 billion to
$4.3 billion. Analysts polled by Thomson Reuters I/B/E/S expect
profit and revenue at the higher end of those ranges, at $1.17 a
share on revenue of $4.32 billion.
Net income in the second quarter rose 4 percent to $382
million, or $1.26 a share, compared with $367 million, or $1.17
a share, in the year-ago quarter.
Excluding one-time items, Delphi earned $1.42 a share,
topping the $1.33 per share expectation of analysts.
Still, Morgan Stanley analyst Ravi Shanker said it was a
"low quality" beat and results were "tepid." He said Delphi's
operations were mostly in line, and results were helped by lower
interest expense, tax rate and share count.
Revenue rose 5 percent to $4.45 billion, compared with the
$4.47 billion Wall Street had forecast.
Shares were down 0.4 percent at $67.31 on the New York Stock
Aside from the decline in South America, Delphi's revenue in
Asia and North America grew 13 percent and 7 percent,
respectively, while Europe was flat.
The company's planned cost cuts in South America, which
makes up about 5 percent of total revenue, will include "fairly
significant" job cuts, especially in Brazil, Chief Financial
Officer Kevin Clark said.
For the year, Delphi now expects earnings before one-time
items in the range of $4.95 to $5.10 a share on revenue of $17.2
billion to $17.6 billion. Clark said the company does not expect
to top the mid-point of its revenue forecast.
It previously forecast earnings in a slightly lower range of
$4.80 to $5.00 a share, though the revenue outlook is unchanged.
Analysts expect $5.01 a share on revenue of $17.5 billion.
The company expects global vehicle production this year to
rise about 3 percent to just under 91 million vehicles,
including a rise of 5 percent in North America, 2 percent in
Europe and 9 percent in China.
It sees output falling 15 percent in South America. Research
firm IHS expects global auto sales this year to hit 85.46
Delphi has been in the news in recent months because it
supplied the defective ignition switch to General Motors Co
which was linked to at least 13 deaths.
Earlier this month, in testimony to a U.S. Senate
subcommittee, O'Neal said his company simply made the switch
that GM had requested. GM CEO Mary Barra agreed Delphi was not
(Additional reporting by Bernie Woodall in Detroit; Editing by