Ten of North America's largest suppliers improved sales last quarter despite price-cut demands from automakers.
The publicly traded companies, which are among the top 20 suppliers to automakers in North America, had higher revenue in the quarter that ended June 30 than in the year-ago period.
For all publicly traded suppliers that have announced their earnings, revenue rose 11 percent from last year, according to Robert W. Baird & Co., an investment banking company in Milwaukee. Earnings jumped 20 percent.
Suppliers overcame lower production volumes, price pressure from automakers and higher costs for raw materials, especially steel. They did it by increasing non-Big 3 business and by varying their geographic mix.
|Higher sales, profits|
|Net income in millions and revenue in billions for the quarter that ended June 30 from 10 of the 20 largest suppliers to North America. Percentage change reflects change from same quarter of 2003.|
|NET INCOME (LOSS)*||% CHANGE||REVENUE||% CHANGE|
|4. Johnson Controls||222.3||17||6.79||14|
|5. TRW Automotive||75||||3.16||6.2|
|8. Collins & Aikman||-29.7||||1.04||0.3|
|9. American Axle||55.3||8.4||0.93||1.8|
|10. Tower Automotive||-2.7||||0.78||5.4|
|Source: Company reports|
Favorable currency exchange rates also helped.
Among the 10 suppliers tracked by Automotive News, only Collins & Aikman Corp. and Tower Automotive Inc. posted net losses in the quarter.
Collins & Aikman's $29.7 million net loss included $26.0 million in after-tax charges for restructuring and other items.
Tower's earnings were hurt by charges totaling $4.6 million after taxes. The biggest impact was a $2.3 million write-off of debt issuance fees.
The top suppliers generally had a solid first half of the year, but some are hunkering down for a tough third quarter.
Delphi Corp. and Visteon Corp., the two largest suppliers to North America, are expecting net losses in the next quarter.
Many suppliers expect lower North American production.
But Baird predicts better earnings in general despite flat year-to-year North American light-vehicle production during the rest of the year.
"Should be a third quarter of double-digit (earnings) gains," says David Leiker, senior automotive analyst at Baird.
"We believe earnings, with flat vehicle production, can continue growing 20 percent through 2005."