Visteon Stock Hits New All-Time Low

DETROIT April 27, 2005; Sarah Karush writing for the AP reported that Visteon Corp., the world's second-largest auto parts maker, posted a far greater loss than expected Wednesday, due to lower sales to former parent company Ford Motor Co., higher steel costs and price reductions. The company's stock plummeted to a new all-time low.

Shares of the company fell 57 cents, or 13 percent, to $3.87 in afternoon trading on the New York Stock Exchange -- its lowest price since Visteon was spun off from Ford in 2000.

Visteon -- which has been in talks to restructure its relationship with Ford, still by far its largest customer -- posted a first-quarter loss of $188 million, or $1.49 per share, compared with net income of $20 million, or 16 cents per share, a year ago. Sales edged up to $4.99 billion from $4.97 billion last year.

Analysts surveyed by Thomson Financial were looking for the company to post a loss of 43 cents per share on sales of $4.79 billion in the latest quarter, which ended March 31.

The company, based in Van Buren Township, said 2005 results were hurt by lower sales to Ford; higher steel, aluminum, copper and resin costs; price reductions; and increased post-retirement benefit costs.

"We see these challenges continuing, along with our efforts to drive unnecessary costs out of our system," chief executive Mike Johnston said during a conference call.

Ford revenue for the quarter was $3.3 billion, down 11 percent from a year ago. The decrease was attributed to a 10 percent reduction in Ford's North American production, as well as price reductions.

However, non-Ford sales increased 30 percent to $1.7 billion, Visteon said. The nearly $400 million increase in non-Ford revenue was due to new business and favorable currency exchange rates, the company said. Non-Ford revenue for the quarter represented 35 percent of total sales, an 8 percentage point increase from the same period in 2004.

"As our customer diversification continues to grow, we're focused on delivering on our customer commitments through successful launches," Johnston said.

Visteon said it continues talks begun in September on restructuring the company's relationship with Ford. The company said there was no guarantee it could stick to its financial agreements in the future because of the ongoing Ford talks and uncertain market conditions. Visteon said it is exploring financing alternatives.

For the same reasons, Visteon said it was not providing guidance on future earnings.

In March, Ford agreed to reduce wage reimbursements Visteon now pays for Ford hourly workers assigned to work at the supplier and to accelerate some payments.

"It is not the final deal, but I think it shows good progress, allowing us to receive some relief while we continue to work on the structural changes in the broader deal," chief financial officer Jim Palmer said Wednesday.

Merrill Lynch analyst John Casesa said in a research note that Visteon has no incentive to limit its reported losses while it is in talks with Ford.

"Visteon's current poor results only add to its leverage to extract an acceptable settlement from Ford, which we expect will be agreed to before year-end," Casesa said.

Visteon Corp.: http://www.visteon.com/