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May 24, 2024

Visteon Q2 earnings: Net income slips 17%, but sales surge

Automotive electronics supplier Visteon's second-quarter net income dipped, while revenue rose strongly amid new product launches. Net income fell 17 percent to $20 million, the suburban Detroit

Automotive electronics supplier Visteon's second-quarter net income dipped, while revenue rose strongly amid new product launches.

Net income fell 17 percent to $20 million, the suburban Detroit company said in a statement Thursday. Visteon CFO Jerome Rouquet said in a call with investors that income was hit by higher net engineering costs and increased selling, general and administrative expenses.

But revenue rose 18 percent to $983 million, excluding currency fluctuations. The supplier said the growth was the result of a 12 percent increase in vehicle production from Visteon's top customers and second-quarter product launches, but that gains were somewhat offset by continued elevated prices from Tier 2 suppliers amid the easing global microchip shortage.

CEO Sachin Lawande said sales growth was also driven by "the strong demand for our digital cockpit products and the emergence of our electrification business. Our sales have now outperformed industry vehicle production for 17 consecutive quarters and demonstrate that the digital transformation is in full effect in our industry."

Visteon's adjusted earnings before interest, taxes, depreciation and amortization rose nearly 14 percent to $90 million, but the growth was offset by a $15 million one-time charge resulting from a product recall with one customer.

"This issue was detected after a few months of production in Q1 of this year, and was quickly fixed in early Q2," Lawande said. The flawed technology combination was only used in the two products subject to the recall, he added.

Visteon products launched on 35 vehicle models in the second quarter, more than triple the 11 in the same quarter last year. The launches included a 12-inch center display in a Chinese electric pickup made by Jiangling Motors Corp.

The company also said it generated $4 billion of new business in the first half of 2023, up 29 percent from last year. The new partnerships included Visteon's first EV power electronics deal with a European luxury automaker, though executives did not name the brand.

Visteon reaffirmed its commitment to expanding electrification business beyond battery management, but executives said that new electrified business ramp-up was proceeding slower than anticipated as customers' EV production grew more slowly than predicted. Lawande noted that Visteon is also positioned to support internal combustion engine vehicles throughout this transition.

"The challenges faced by most OEMs in transitioning to electric vehicles are public knowledge, and these OEMs will continue to rely on their high-volume and profitable ICE business for several more years," he said.

The supplier repurchased 211,779 shares for a total of $30 million in the second quarter.

Visteon ranks No. 62 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $3.8 billion in 2022.

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