* First-quarter earnings/share $0.88 vs $1.04 year earlier
* Sales in Europe fall 17 pct, North America down 2 pct
* Expands restructuring program to $375 mln from $300 mln
* Initiates quarterly dividend
* Shares down 3 pct
By Sagarika Jaisinghani
May 1 Vehicle parts maker Delphi Automotive Plc
reported a 20 percent drop in first-quarter profit on
the back of lower sales in Europe and North America, and
increased its cost cutting.
Shares of the company, once the largest U.S. auto parts
supplier, were down 3 percent in midday trading.
Although U.S. light vehicle production continues to rise, a
slowing commercial vehicle market and a weak European economy
are dragging down the company's performance.
Delphi said on Wednesday it expanded the restructuring
program it began in the fourth quarter of 2012 by $75 million to
about $375 million.
More than three quarters of its restructuring costs are in
Europe and include job cuts and plant closures. The company has
not disclosed details of the job cuts.
Delphi, which was spun off from General Motors in
1999 and emerged from bankruptcy in 2009, recorded about $34
million in restructuring costs in the first quarter.
The company said it expected vehicle production in Europe to
fall by 5 percent in 2013, steeper than the 4 percent it
forecast in February.
Delphi forecast revenue growth of 4 percent to 7 percent in
2013, while it expects global production to rise by 2 percent.
However, Guggenheim Securities analyst Matthew Stover said
he expects Delphi to underperform global vehicle production in
"In order for Delphi to sustain its (earnings) multiple
company needs to begin to show relative revenue growth to global
production through 2013 and into 2014 and beyond," he said.
Delphi's sales in Europe fell 17 percent in the quarter
ended March 31, while North America sales dropped 2 percent,
primarily due to lower production by one of its large customers.
Company executives declined to name the customer in an
interview with Reuters, but said it was a light vehicle
The company's large customers include General Motors Co
, Volkswagen AG, Daimler AG, Ford
Motor Co, Hyundai Motor Co and Toyota Motor
Europe, the Middle East and Africa together accounted for
about 41 percent of Delphi's total revenue in 2012. The company
did not provide geographical breakdown of sales for the quarter.
Net income attributable to Delphi fell 20 percent to $276
million, or 88 cents per share from $342 million, or $1.04 per
share, a year earlier.
Excluding items, Delphi earned $1.07 per share.
Revenue fell 6 percent to $4 billion, adjusted for currency
rate differences, commodity price movements, acquisitions and
The company initiated a quarterly cash dividend of 17 cents
per share, payable to shareholders of record at the close of
business on March 15.
Auto parts supplier Dana Holding Corp last month
also reported a drop in quarterly profit due to lower sales of
axles, drive shafts, ceiling and thermal components in North
America and Europe.
Delphi's shares gained almost 10 percent to Tuesday's close
since April 23 when the Wall Street Journal reported the company
had expressed interest to buy Johnson Controls Inc's
automotive electronics business. ()
Delphi Chief Executive Rodney O'Neal declined to comment on
the matter on a post-earnings conference call on Wednesday.
The shares were down 3 percent at $44.77 in midday trading
on the New York Stock Exchange.