Just three months into his new job, Visteon Corp. President Michael Johnston is seeking more cost cuts at the world's second-largest auto supplier.
Production slowdowns at Ford Motor Co., notably with the Explorer, are leading to drastic drops in Visteon's fourth-quarter financial performance.
Johnston heads a 30-day study looking to reduce overhead at Visteon's worldwide operations.
Employment reductions could be part of the cutbacks, a Visteon official said.
'We do believe we have too much structure ... too many layers interfacing with the customer,' said Susan Skerker, Visteon senior vice president of business strategy and corporate relations. 'Our structure has made it a little more difficult to be lean and mean and fast. And we really need to be fast in getting back to new customers and getting them bids.'
In the meantime, Visteon is trimming capital spending, putting a freeze on new hires, slashing most production overtime and substantially reducing discretionary spending.
'Our intention in taking these immediate actions is to shore up our cash levels and ... save what we can in the remaining days of 2000,' Skerker said. 'With that, plus the restructuring, our intention is to improve the profitability outlook for 2001.'
Visteon said on Tuesday, Dec. 5, that it would post a net loss for the final three months of this year because of the Ford cutbacks and a noncash write-down of its glass unit's assets.
Operating income is expected to fall to 36 cents per share; where analysts had anticipated 63 cents per share. Adding the glass charge of $140 million, or $1.08 per share, Visteon's loss may total 72 cents per share for the quarter.
The new operating profit estimate includes a 16 cent-per-share gain from the sale of Visteon's 49 percent interest in Conix Group, a supplier of fascias, moldings and components.
Seeking glass alternative
The glass charge reflects revised estimates of those assets in light of lower volumes, higher natural gas prices and a softening market, officials said.
It was a necessary accounting requirement given a failed deal to sell most of the glass business to Pilkington PLC and Visteon's reluctance to invest more money in the operations. The company continues to investigate alternatives for the glass unit.
Given current market conditions, though, it is unlikely a sale of the glass business will come soon, Merrill Lynch analyst John Casesa said. Still, he said, Visteon must reduce its high fixed-cost structure.