By Jeff Bennett
Auto-parts maker Delphi Automotive PLC reported a 15% jump in fourth-quarter net profit and beat analyst expectations although currency and commodity costs ate into revenues.
The company said in its full-year financial forecast that it expects to generate as much as $17.5 billion of revenue, setting the stage for the leadership change as longtime Delphi-veteran Rodney O'Neal retires next month and hands the chief executive role to Kevin Clark.
Mr. Clark takes over Delphi at a time when auto makers are clamoring for all things technology. He will be challenged with balancing demand against controlling production capacity, especially in China where companies continue adding plants. A softness in the European market continues and much of the auto industry is facing troubles in Russia. The economic turmoil there has forced some companies, such as General Motors Co., to idle their factories.
For the fourth quarter, Delphi reported a profit of $344 million, or $1.16 a share, compared with $298 million, or 97 cents a share a year earlier. Excluding some items, the company earned $1.32 a share, beating analyst estimates. Revenue, however, was virtually flat at $4.15 billion and below analyst expectations of $4.24 billion.
Delphi had signaled that it is wrestling with currency fluctuations especially with the strong dollar in Europe which is a major revenue generator for the company. Revenue fell 3% in the quarter in Europe and 9% in South America due primarily to currency issues.
"While bears may nitpick here, we don't believe much has changed," RBC Capital Markets LLC analyst Joesph Spak said in a research note. "We continue to like the story of revenue acceleration in 2015 and 2016, see potential upside to 2015 guidance, and find the valuation attractive."
Delphi said it expects per-share earnings to range from $1.15 to $1.30 for the current quarter and revenue to be in the range of $4.15 billion to $4.25 billion. Full-year earnings are expected to be in the range of $5.35 to $5.65 per share, with revenue as much as $17.5 billion.
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