Profits from China to top $100 Million - Delphi

DETROIT, April 16, 2004; Reuters reported that automotive parts supplier Delphi Corp. generated $100 million in profit, or about 15 percent of total operating earnings, from China in 2003 and expects profit there to rise further this year, a top official said on Friday.

"What's going to happen in China is our profits will go up. Sales are growing at a very nice rate," Delphi Vice Chairman and Chief Financial Officer Alan Dawes told analysts and reporters on a conference call.

Total revenue, including from joint ventures, in China will rise past $1 billion this year, up from about $850 million last year, Dawes said.

"As long as we're in this strong growth mode, (China) will be a meaningful portion of our earnings," he told Reuters in a separate interview.

The double-digit profit margins that China generates may come under pressure, but not in the near-term, Dawes said in response to a question from one analyst.

Some analysts have said that profit margins for the automotive sector in China -- the world's fastest-growing auto market -- could drop as the industry adds capacity to build more vehicles.

Delphi's China operations have benefited from the rapid growth of its former parent company, General Motors Corp., in the region. GM plans to add more production capacity in China, the fastest-growing market for new cars and trucks in the world.

"Since we're a big supplier of theirs over there, we'd love to see them achieve those growth levels," Dawes said of GM.