DETROIT -- TRW Automotive Holdings Corp. already has said it will close nine plants by the end of 2007, and more closings may be on the way.
TRW is in the midst of a major cost-cutting effort as it tries to ride out turbulence in the supplier business. TRW specializes in vehicle control and safety systems including brakes, steering, suspension systems and occupant safety systems such as seat belts and airbags.
"We will continue to evaluate whether any other plants should be closed," said CEO John Plant in announcing TRW's third-quarter results. "We expect the pace of our restructuring efforts, which includes nine plant closures, to continue into 2006."
In the third quarter, TRW's net profits dropped 23 percent to $10 million compared to the same period last year. The company cited costs associated with the plant closings, related restructuring and high prices for raw materials. Sales increased 6.5 percent, to $2.9 billion for the quarter. For the first nine months of 2005, sales increased 7.7 percent to $9.5 billion.
The effect of inflation of commodity prices will have cost TRW $200 million for 2004 and 2005, Plant said. The company last week increased its estimate of restructuring costs from $70 million to $90 million for 2005. TRW spokesman Manley Ford said the supplier's restructuring costs have averaged about $35 million over the past several years.
TRW is shifting some of its production and other activities to low-cost countries. At the same time, the company is trying to expand its reach in its core safety businesses. Last week, TRW said it had acquired DalphiMetal Espana SA, also known as Dalphimetal. The Spanish company makes airbags and steering wheels.
John Murphy, analyst for Merrill Lynch in New York, said in a report that TRW earnings beat expectations in the third quarter, but that difficult times lie ahead.
"Despite the company's best efforts, we expect industry headwinds to keep a lid on earnings growth in the near term," he wrote.
TRW, of Livonia, Mich., ranks No. 11 on the Automotive News list of the top global suppliers with worldwide original-equipment automotive parts sales of $11.14 billion in 2004.
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