Visteon’s net income drops 51% as production of some of its main customers slow down
Visteon Corporation saw its net income drop 51% to US$ 21 million in the third quarter as vehicle production volumes of its main customers decreased in every region, said the company’s President and CEO Sachin Lawande. Its adjusted EBITDA was of US$ 71 million, a decrease of 14.5% compared with US$ 83 million in the same period last year.
The Michigan-based developer and manufacturer of cockpit electronics and connected car solutions reported sales of US$ 681 million, down 11% compared with US$ 765 million in the third quarter of 2017. On a regional basis, Asia accounted for 42% of sales, Europe 32%, and the Americas 26%.
The automotive industry experienced several headwinds in the third quarter that resulted in lower vehicle sales and production among Visteon’s top customers globally. “Some of the signs of slowdown were already visible in the second quarter, but the rapid decline in China and the flooding in Japan worsened the overall market further,” said Lawande at the earnings conference call. As a result, production volumes for the top Visteon customers were down 6% on a year-over-year basis.
The biggest surprise in the quarter was a significant drop in sales and production in China. Consumer demand weakened due to multiple factors including the trade dispute with the U.S. This led to a decline in sales of passenger cars for 8% and production by 7% year-over-year.
In North America, although overall production volume increased 2%, the production volume at top Visteon customers was down 2%. The mix continue to shift away from sedans and toward trucks and SUVs which also impacted the company negatively.
In Europe, production volumes for the third quarter decreased by 5% year-over-year whereas Visteon customers were down slightly more at 6% year-over-year.
However, company officials remain confident about Visteon’s long-term growth, pointing out that global vehicle manufacturers have awarded Visteon new businesses worth of US$ 5.4 billion in the first nine months of 2018.
Among those new programs, Lawande highlighted an integrated digital cluster and IVI display for a Japanese automaker, a significant display audio for a European company and a SmartCore cockpit domain controller for a Chinese vehicle manufacturer.
It’s worth noting that during the first nine months of the year, Visteon repurchased US$ 250 million of shares, and as of Sept. 30, 2018, and is authorized to purchase an additional US$ 450 million of shares through Dec. 31, 2020, under the Board of Directors’ Jan. 15, 2018, resolution.
Visteon operates four manufacturing facilities in Mexico, two in Chihuahua’s state capital and two more in Reynosa, Tamaulipas. It also owns a Technical Center in Queretaro which develops user interfaces (UI) software for automotive applications.