Visteon offsets U.S. slowdown with Q2 gains in China

on Jul29

Sachin Lawande: “With $3.1 billion in new business wins in the first half, we are on track to achieve our target for the full year.”

UPDATED: 7/28/17 1:14 pm ET – adds details

DETROIT — Visteon Corp. said net income ramped up during the second quarter as the supplier offset a slowdown in the U.S. with strong sales in China and product innovations.

Net income surged 73 percent to $45 million, from $26 million a year earlier, largely because of various one-time events. Revenue was essentially flat at $774 million, the company said in a report Thursday.

“New business wins remained strong, with about 50 percent in the fast-growing segments of all-digital instrument clusters and display audio,” CEO Sachin Lawande said in a statement. “With $3.1 billion in new business wins in the first half, we are on track to achieve our target for the full year.”

Visteon said the one-time events impacting net income involved a gain from selling an affiliate and lower restructuring expenses. The 2016 results also contained a one-time loss of $9 million from discontinued operations. 

Sales in China, the company’s highest-profit region, advanced 38 percent to $83 million, excluding foreign exchange, during the quarter.

Overall, Visteon says it expects a 2 percent year-over-year decrease in production volume in North America, accounting for 19 percent of its business, but a gain of 1 percent in China and 3 percent in Europe. The supplier said it expects to see total revenue of between $3.1 billion and $3.2 billion for 2017.

In a conference call, Visteon executives said the company plans to capitalize on trends in audio and infotainment systems, including integration of Apple’s CarPlay and Android Auto.

“By 2021 we expect three fourths of all clusters to be digital and move out of luxury vehicles and into mass market,” Lawande said in the conference call.

Visteon’s earnings per share skyrocketed nearly 86 percent to $1.41 from 76 cents during the same quarter last year, easily beating analysts’ $1.27 consensus.

Visteon’s shares advanced 1.4 percent to close Thursday at $111.53.

China outlook

Industry watchers have paid sharper attention to the Chinese auto industry’s velocity of growth, as global automakers have pinned their hopes on China for revenue and profit.

Visteon said it benefited in 2016 from tax-incentives that ramped Chinese vehicle sales to their fastest pace in three years. But Lawande said he anticipates a cool-down in the market during the second half of 2017.

The company also expects the Chinese government to play a role in driving China’s demand, Lawande added.

“Sales depend on whether the Chinese government will maintain the current incentives for the full year of 2017,” Lawande said.

Visteon, of Van Buren Township, Mich., ranks No. 67 on Automotive News‘ list of the top 100 global parts suppliers with worldwide sales to automakers of $3.16 billion in 2016.

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