THE VINDICATOR, YOUNGSTOWN
A company official attributed the drop to a decline in automobile production.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Delphi Automotive Systems continues to cut costs as it struggles with lower earnings and sales.
The Troy, Mich.-based auto supplier, which is the parent company of locally based Delphi Packard Electric Systems, said today that it earned $164 million, or 29 cents a share, in the second quarter, compared with $424 million in the same quarter last year.
Sales last quarter were $6.9 billion, compared with $7.8 billion the second quarter last year.
Reasons: Alan Dawes, Delphi chief financial officer, said that vehicle production in North America has stabilized, but at much lower levels than last year.
The company also was hurt by soft after-market sales and foreign currency exchange rates, he said.
Slower car and truck sales have cut back on Delphi's orders.
Cuts: Delphi said earlier this year that it was going to reduce its work force by 11,500 and close plants.
In the second quarter, it closed two plants and reduced its work force by 2,800. It said it expects additional cuts of between 5,300 and 5,800 during the second half of this year.
Delphi also sold its interest in three joint ventures and a heavy-duty diesel engine component plant in England.
Its actions reduced its selling, general and administrative expenses by $15 million last quarter.
Looking ahead: Dawes said vehicle sales will continue to be lower in the third quarter.
"The global auto industry traditionally experiences lower volumes during the third quarter as carmakers undergo vehicle changeovers and other seasonal downtime. Delphi is managing its operations accordingly," he said.
He said analysts' third-quarter estimates of earnings of $56 million on sales of $6.3 billion are in line with the company's estimates.
Diversification: Despite lower sales, Delphi continued its efforts to diversify its sources of revenue last quarter, Dawes said.
Delphi had 32 percent of its sales to customers other than General Motors, compared with 28 percent in the same quarter last year. Delphi's higher-tech, more electronically enhanced products continued to gain acceptance from customers, he said.