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Visteon posts Q2 profit

UPDATED: 8/1/2006 9:33 A.M.

CHICAGO -- Visteon Corp. on Tuesday posted a quarterly profit, reversing a year-ago loss, as the auto parts maker began benefiting from its multiyear restructuring plan, and raised its full-year profit outlook.

Visteon also left intact its free cash flow expectations, but said the third quarter is expected to be "challenging" due to seasonally low production volumes globally.

"Producing free cash flow, although minimal, is a positive step, and affirmation of their free cash flow guidance for the year shows the restructuring is on track," Fitch Ratings Managing Director Mark Oline said.

"Longer term, Visteon still has a number of years of restructuring ahead of it," Oline said, adding that it will take several quarters to determine how effective the restructuring has been at changing the cost structure.

Visteon reported net income of $50 million, or 39 cents per share, in the second quarter, compared with a net loss of $1.24 billion, or $9.85 per share, a year earlier, when it took charges for a bailout by Ford Motor Co.

Excluding one-time items, Visteon reported profit of 33 cents per share, while analysts expected a loss of 6 cents, according to Reuters Estimates.

Revenue was $3 billion, matching analysts' expectations. Sales a year earlier were $5 billion, including results from facilities returned to Ford.

Visteon averted bankruptcy in 2005 by returning nearly two dozen facilities to Ford and shedding thousands of high-wage unionized hourly workers. In January, Visteon said it would shed up to another 23 facilities in a continued restructuring.

Visteon hopes to complete the latest restructuring by 2008, the date it set in January. By then, it hopes to have revenues balanced between Asia, Europe and North America.

The company has narrowed its product focus to interiors, climate controls and electronics, where it has won nearly all of its new business. Still, Visteon must cope with potential production cuts by its automaker customers and escalating raw materials costs.

Visteon raised its 2006 full-year forecast for earnings before net interest expense, extraordinary items and income tax provisions, and excluding unreimbursed restructuring expenses and write-downs of asset values.

On that basis, Visteon forecast 2006 earnings ranging from $170 million to $200 million, compared with its May forecast of $120 million to $150 million. It still sees product sales of about $11 billion.

Visteon ranks No. 8 on the Automotive News list of the top 100 global suppliers with estimated worldwide original-equipment automotive parts sales of $15.87 billion in 2003.

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