Delphi Shows Signs of Cash Flow
Automotive supplier, Delphi Corp has reported third quarter revenues of $6.65 billion and a net loss of $114 million (20 cents per share). When this is compared with net losses of $353 million (63 cents per share) last year, this figure shows signs that the company’s cash is flowing again.
The company’s revenue rose to $6.65 billion from $6.56 billion a year earlier for the Troy, Michigan-based company. Delphi, the No 1 US auto parts maker, has suffered as a result of North American production cuts by General Motors Corp, which accounted for more than half of its revenue last year, and from the rising cost of steel and other raw materials. Delphi said earlier in October that it planned to defer some spending, limit hiring and work with unions, suppliers and customers on more cost cuts.
“The third quarter was a more challenging environment than we experienced in the first half of 2004, with increased commodity pressures, low production volumes, product launch issues and lower attrition,” said J T Battenberg III, Delphi’s chairman, chief executive officer and president. “While we have near-term challenges, our long-term strategy remains on track and we were able to grow our non-GM sales to 47 per cent of third quarter revenues and generate strong operating cash flow of $360 million – more than double the amount in third quarter of 2003. This strong cash flow generation, fuelled by our non-GM revenue growth and aggressive cost reductions, allowed Delphi to strengthen its balance sheet and will continue to position Delphi for long-term value creation.”
“Furthermore, while we are taking aggressive actions to reduce our cost structure, we will not compromise customer-critical quality and delivery areas or waiver in our commitment to R&D,” said Alan Dawes, Delphi vice chairman and chief financial officer. One of the cost reductions, which Mr Dawes described, was the consolidation program the company has been running at its Automotive Holdings Group Flint West, Michigan. Since October 2003 the company has made hourly reductions in the workforce which have totalled approximately 5,675, a number the company anticipates will be closer to 6000 by the end of the year.
Delphi reaffirmed its fourth quarter 2004 guidance for revenue, earnings and cash flow.
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