Visteon works its improvement plan, free cash flow falls

By Lisa Kerner

Charlotte, N.C., Aug. 1 - Visteon Corp. is continuing to execute its three-part improvement plan that includes restructuring, improving base operations and growing the business, chairman and chief executive officer Michael F. Johnston said during the company's second-quarter earnings call on Wednesday.

The company has completed 16 of its 30 restructuring activities.

During the quarter, the company closed on its additional $500 million loan that Johnston noted was "timely, prudent and well-priced."

The term loan helps provide Visteon with the liquidity needed to execute the three-year improvement plan. It also provides insurance in a "period of significant change" in the automotive sector, executives said.

Visteon expects to continue capturing business in the small-car Asian market, with Asian sales expected to be up 50% in 2009. North American customer volumes were down significantly for the period. The company completed divesting non-core chassis operations and ended brake production at its Swansea, U.K. facility.

Financial highlights for the quarter included product sales of $2.8 billion, a net loss of $67 million, or $0.52 per share, and cash from operating activity of $146 million. Capital spending reached $80 million, and Visteon reported free cash flow of $66 million. Overall debt was flat.

Free cash flow for the first half of 2007 was negative $129 million, $22 million lower than the first half of 2006.

Looking ahead, executives said the focus would be on maintaining adequate liquidity, with free cash flow expected to be in the range of negative $180 million to negative $280 million for the full year 2007.

Visteon is a Van Buren Township, Mich., automotive systems and technology supplier.

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