Delphi’s loss reduced by smaller expenses

The auto parts supplier reduced its quarterly loss to $1.2 billion.

DETROIT (AP) — Delphi Corp. said Tuesday that its third-quarter net loss narrowed due to smaller expenses related to its reorganization under bankruptcy protection, but it continued to struggle against the effect of auto industry production cuts in North America.

Troy-based Delphi, the former parts-making operation of General Motors Corp., lost $1.2 billion, or $2.08 per share, compared with a loss of $2 billion or $3.51 per share, in the third quarter of 2006.

The auto parts supplier’s loss includes an accrual of $369 million for interest expenses related to its bankruptcy reorganization plan, $124 million for charges for warranty matters and $112 million in costs including benefits for employees who have been let go.

It also included charges of $244 million for programs to train U.S. employees for new careers, down from $1 billion in 2006’s third quarter.

In a filing with the Securities and Exchange Commission, Delphi said production cuts in the auto industry, rising commodity prices and high labor costs were to blame for its “poor financial performance.” But Delphi said union concessions approved this year will help it improve its competitiveness.

“We are beginning to see the benefits of decreased labor costs, primarily through lower costs of sales and the resultant improvement in gross margin,” Delphi said. “However, we still have future costs to incur to complete our transformation plan, divest of noncore operations and realign our cost structure.”

Delphi reported revenue of $6.2 billion in the third quarter of 2007, up about 3 percent from $6 billion in the same three months in 2006.

GM remains Delphi’s biggest customer, and the supplier said its future remains tied to GM. Non-GM revenue was $3.6 billion, up nearly 6 percent from $3.4 billion in the third quarter of 2006. Non-GM business was 58 percent of revenue for the latest quarter, compared with 57 percent a year ago.

“Delphi is facing considerable challenges due to revenue decreases and related pricing pressures stemming from a substantial reduction in GM’s North American vehicle production in recent years,” Delphi said in the filing.

Delphi, which was spun off by GM in 1999, filed for bankruptcy in 2005. It plans to emerge from bankruptcy early next year.