August 2, 2007 -- Although U.S.-based auto suppliers aren't showing uniform gains in their quarterly earnings, the results show that they are showing promise - and in some cases prospering - by moving major operations overseas. Continued growth in Asia and other markets beyond North America helped TRW Automotive Holdings Corp. report a 7 percent increase in second-quarter net income on Wednesday. Quarterly earnings rose to $97 million, or 94 cents a share - beating Wall Street's expectations.
Sales in lower-cost regions such as Asia also helped offset North American declines for Visteon Corp., which reported a net loss of $67 million, or 52 cents a share. The loss compared with net income of $50 million in the same quarter last year. The loss for the former Ford Motor Co. parts operation came amid production cuts from Ford - Visteon's largest customer - and a multiyear restructuring plan that includes closing several facilities in the U.S. and Europe. Asia represents 33 percent of Visteon's sales, more than North America and just behind Europe.
By 2009, Visteon officials predict that 50 percent of revenue will come from Asia as the company shifts more production to lower-cost regions. "That kind of jumped out at me," said Kirk Ludtke, an analyst with CRT Capital Group LLC in Stamford, Conn. "There aren't a lot of suppliers who expect to generate 50 percent of their sales in Asia." TRW President and Chief Executive John Plant said in a conference call Wednesday that the Livonia-based company has "vastly diversified" into the European market, and it's a bigger portion of its sales than the U.S. TRW also sees itself growing with its Asian sales base in vehicle manufacturing. Suppliers are shifting abroad as automakers move operations beyond the U.S. border.
Source: St. Louis Post-Dispatch
Source: Factiva
