AUTO INDUSTRY Delphi's second-quarter earnings go up

Delphi expects to lose money this quarter as automakers make cuts.
DETROIT (AP) -- Delphi Corp., the world's largest automotive parts supplier, reported higher second-quarter earnings Friday on continued structural cost improvements and increased sales to clients other than its No. 1 customer, General Motors Corp.
But the Troy-based supplier said it could take a loss in the current quarter if, as expected, major automakers trim production to reduce inflated inventories.
Delphi, the parent company of Warren-based Delphi Packard Electric Systems, said it earned $131 million, or 23 cents a share, in the April-June period, up from $88 million, or 16 cents a share, in the year-ago period.
Excluding charges related to restructuring and a reduction of income tax reserves associated with a federal audit, Delphi earned $156 million, or 28 cents a share, in line with the consensus estimate of Wall Street analysts surveyed by Thomson First Call.
Rising revenue
Revenue rose 6 percent to $7.5 billion from $7.1 billion a year ago, driven by 23 percent growth in non-GM business.
Delphi, which was spun off from GM in 1999, said its client diversification efforts continue to pay off, as non-GM business in areas such as consumer electronics accounted for 45 percent of second-quarter revenue, a record for the supplier.
"We're seeing this revenue growth translate into strong operating cash flow, which grew 36 percent this quarter," Delphi chairman and chief executive J.T. Battenberg III said in a statement.
Loss expected
The company said it expects a third-quarter loss of between $10 million and $40 million on revenue of between $6.4 billion and $6.8 billion. A primary factor is that analysts say the United States' top two automakers, GM and Ford Motor Co., may have to cut production in the coming months to reduce heavier-than-normal vehicle inventories.
GM and Ford both reported unexpectedly large double-digit sales declines in June.
Excluding charges, Delphi said third-quarter earnings could range from a loss of $20 million to a profit of $10 million. Analysts were expecting earnings of 6 cents a share for the quarter.
Delphi is in the midst of a major restructuring announced in October, when it said it would eliminate 8,500 jobs worldwide by the end of 2004.
The company said it incurred a pretax charge of $46 million in the second quarter primarily related to the reduction of 1,175 jobs from its U.S. hourly work force.
U.S. jobs gone
The company said it now has eliminated 4,925 hourly jobs in the United States since the restructuring began, vs. an announced goal of 5,000 by year's end. Chief financial officer Alan Dawes said the company expects to exceed the original goal by 500 to 1,000 U.S. jobs through attrition by the end of the year.
Delphi said in October it anticipated pretax charges of $807 million over 15 months related to the restructuring. It said Friday roughly $70 million in pretax charges remain.
Delphi earned $185 million, or 33 cents a share, in the first half of 2004, down from $215 million, or 38 cents a share, a year ago.
First-half revenue was $15 billion, compared with $14.3 billion in the same period a year ago.