The Associated Press is reporting that TRW Automotive Holdings Corp., one of the world's largest auto suppliers, posted a profit in the fourth quarter due to aggressive cost-cutting and growing demand for safety equipment, but predicted Tuesday that sales will weaken this year as U.S. automakers cut North American production.
TRW shares rose $1.01, or 3.9 percent, to close at $27 on the New York Stock Exchange. The stock briefly hit $29.15 earlier in the day, near the high end of a 52-week range of $17.64 to $30.
Net income for the fourth quarter was $59 million, or 57 cents per share, compared with a loss of $62 million, or 63 cents, the year before. A reduction in legal reserves boosted its earnings by $18 million, or 17 cents per share, in the latest quarter, TRW said. The performance beat Wall Street's expectations. Analysts surveyed by Thomson Financial were looking for quarterly earnings of 33 cents per share.
Full-year sales totaled $3.14 billion, down 2 percent from $3.19 billion a year earlier but in line with analysts' consensus target of $3.13 billion.
For the year, profit swelled to $204 million, or $1.99 per share, from $29 million, or 29 cents, in 2004. Adjusted for unusual items such as debt retirement expenses, yearly earnings were $176 million, or $1.72 per share, as sales gained 5 percent to $12.64 billion.
TRW President and CEO John Plant said the results were solid considering difficulties in the industry, including production cuts, high costs for aluminum, energy and other commodities, competitive pricing and a weak U.S. dollar. Several U.S. auto suppliers, including Delphi Corp., filed for bankruptcy in 2005.
Plant said TRW's restructuring efforts cost the company $107 million in 2005. The company announced 10 plant closures in 2005, part of its plan to move production from the United States and Europe to lower-cost countries. Plant said TRW expects to spend $50 million before taxes on restructuring in 2006.