Visteon earnings report has some on Wall Street worried
Brent Snavely
Tuesday's earnings report from Visteon Corp. has some on Wall Street concerned about the company's fourth-quarter and long-term outlook.
"Turnaround Hits a Roadblock," is the title of a research report issued Wednesday by David Leiker, equity analyst for Milwaukee-based Robert W. Baird & Co.
Leiker said Visteon's "long-term picture remains unclear with net debt rising and timing of return to profitability uncertain. Savings from restructuring actions (are) on track, although current cost structure is still uncompetitive."
Analyst John Murphy, in a research note issued Wednesday, said Merrill Lynch has lowered Visteon's fourth-quarter estimate to between 65 cents a share and 80 cents a share, "as we expect Ford's fourth-quarter production cuts will continue to pressure (Visteon's) margins."
For the quarter ending Sept 30, Visteon (NYSE: VC) reported a net loss of $177 million or $1.38 a share on revenue of $2.6 million. For the same period last year Visteon reported a net loss of $207 million or $1.64 a share on revenue of $4.1 billion.
"Visteon looked like a winner earlier this year," GimmeCredit bond analyst Shelly Lombard said in a report issued Wednesday. "Results from the first half of the year were up substantially on cost savings from the (Automotive Components Holdings L.L.C.) transaction and other restructuring efforts. But Ford is cutting production, and Visteon is losing volume faster than it can generate cost savings."
Last year Visteon transferred 23 plants to Automotive Components Holdings, a company managed by Ford Motor Co.
For its part, Visteon said its restructuring plan remains on track. During the first nine months of the year, Visteon was awarded new incremental business totaling nearly $1 billion, more than 20 percent of which will go into production in 2007.
In addition to the 23 plants Visteon has transferred to Automotive Components Holdings, Visteon also announced plans in January to fix, sell or close 23 other plants. To date, Visteon said the company has addressed seven of the plants.