DETROIT (Reuters) -- Delphi Automotive Plc today reported stronger-than-expected second-quarter profits, but offered a lower forecast for the third quarter.
Net income in the second quarter rose 4 percent to $382 million, or $1.26 on a per-share basis, compared with $367 million, or $1.17 a share, in the year-ago quarter. Revenue rose 5 percent to $4.45 billion
But 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," CEO Rodney O'Neal said on a conference call.
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.
Morgan Stanley analyst Ravi Shanker said the second-quarter 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.
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, CFO Kevin Clark said.
Delphi 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 million.
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 to blame.
Delphi also is in the crosshairs of a battle between the IRS and many large American companies over the use of offshore tax shelters. The IRS notified the supplier in June it would be taxed as a domestic corporation, despite its previously established tax domicile in the United Kingdom, the company said in a U.S. Securities and Exchange Commission filing.
Delphi ranks No. 13 on the Automotive News list of the top 100 global auto suppliers with worldwide sales to automakers of $15.5 billion in 2013.
Crain's Detroit Business and Automotive News staff contributed to this report.