CHICAGO – Delphi Corp. (DPH), the auto parts supplier, Friday posted a quarterly loss due mostly to production cuts at main customer General Motors Corp. (GM) and warned of a bigger 2005 loss than previously forecast.
"It's not a pretty picture, but at this point the company has a fair amount of liquidity to weather the storm for a fair amount of time," Calyon Securities analyst Joseph Amaturo said. "I would expect the shares to come under pressure today."
Amaturo has a "sell" rating on Delphi (search) shares with a $2.50 price target. Delphi opened at $3.41 a share, up a penny, on the New York Stock Exchange.
Delphi reported a first-quarter net loss of $409 million, or 74 cents per share, compared with net income of $53 million, or 9 cents per share, a year earlier.
Revenue fell 7 percent to $6.9 billion. Non-GM revenue rose about 8 percent to $3.5 billion.
Delphi also said it decided not to record a tax benefit of $190 million in the first quarter from the losses. The accounting decision came because it had already recorded the benefits for several years.
Excluding restructuring charges, Delphi reported a loss of 68 cents per share, and excluding restructuring charges and the loss of the tax benefit the loss was about 34 cents per share.
Analysts, on average, expected Delphi to report a loss of 31 cents per share, according to Reuters Estimates.
"We were really disappointed with the performance in the first-quarter, but we understand that performance because of the low production environment," acting Chief Financial Officer John Sheehan said in an interview.
Delphi said in March it may have to restate financial results from 2001 onward because of accounting improprieties, that prompted the resignation of its chief financial officer.
The results released Friday are preliminary, said Delphi, which plans to complete its internal accounting investigation and release restated financial results by June 30.
Delphi said it expects the 2005 loss to be greater than the $350 million loss it previously forecast because of large vehicle production cuts by GM and high commodity prices. It was spun off from GM in 1999.
Delphi had 185,000 workers worldwide at the end of 2004. It does not plan to increase the current level of job cuts set for 2005.
The company, which plans to cut 8,500 jobs this year, trimmed about 1,500 positions in the first quarter.
GM's production cuts have put pressure on Delphi's plans, but "we are absolutely committed to achieving our numbers and at this time we believe that we will," Sheehan said referring to the job cuts.
The company also plans to sell non-core assets such as in the announced sale of its battery business to Johnson Controls Inc.
Delphi expects second-quarter revenue of $7.2 billion to $7.4 billion, with operating cash flow of $100 million to $150 million, excluding asset sales. Delphi is required to make a minimum funding contribution of about $600 million to U.S. pensions in the second-quarter.
Delphi cut its prior range forecast for 2005 GM production in North America by 6 percent to 8 percent, trimming its prior revenue forecast by $900 million to $1.1 billion, it said.