On Tuesday, auto parts maker Visteon Corp. (VC) announced that its third-quarter loss was significantly smaller than that of the same period last year before it completed a major asset restructuring with Ford Motor Co. (F).
The company’s third-quarter loss narrowed to 200 million U.S. dollars, or 1.58 U.S. dollars per share, compared with a loss of 1.4 billion U.S. dollars in the same period last year and a combined loss of 11.48 U.S. dollars. In the same period last year, the company included $1.3 billion in tax expenses and asset impairment expenses, while in the third quarter of 2005, it included $11 million in expenditure, which was 9 cents per share.
Earlier Wall Street analysts on average expected the company’s third-quarter loss of $1.34 per share.
Revenue in the third quarter fell to US$4.12 billion from US$4.14 billion in the same period of last year. Sales to customers other than Ford Motor increased to US$108 million, but sales to Ford Motor Co. declined. Sales to customers outside Ford accounted for 36% of third-quarter revenue, up 3%.
The auto parts manufacturer based in Van Buren Township, Michigan, and Ford Motor Company, headquartered in Dearborn, Michigan, reached an agreement on October 1 to transfer the remaining 23 factories and operating agencies to Ford Motor Management. Automotive Components Holdings LLC.
Under the agreement, Vestin will also receive 331 million U.S. dollars to repay the debt of Ford Motor Co., as well as to solve the employment problem of approximately 18,000 trade union members in the aforementioned factories and institutions.
Westone expects sales of auto parts and glass products will drop by 40% in the fourth quarter from US$4.7 billion in the previous quarter, with more than half of its revenue coming from customers other than Ford Motor.
Westone also expects that the fourth quarter loss will continue to shrink compared to the third quarter, but still can not achieve profitability, or to ensure that operating cash flow turns positive.
“The auto parts industry is still in a difficult time. The level of production and the price of the products are not stable. However, after reaching an agreement with Ford Motor, the company is expected to see significant improvement after 2006,†said John Stone, chairman and chief executive officer of the company. (Mike Johnston) said in a statement.
On Monday, the company's stock rose 35 cents to close at $4.06.
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