Automobile parts supplier Visteon Corp. in 2009 posted a full-year net profit for the first time in its history, boosted by a $195 million gain from terminated retiree benefits.
The supplier of climate controls, interiors and electronics posted net income of $184 million on revenue of $6.42 billion in 2009, swinging from a net loss of $647 million on revenue of $9.08 billion in 2008.
Visteon even beat its own expectations. The company didn't expect to post positive full-year net income until 2011, and estimated a $149 million net loss for 2009, according to the company's first Chapter 11 reorganization plan filed in December.
Visteon also made money in the 2009 fourth quarter, posting net income of $297 million on revenue of $1.97 billion, compared with a $350 million net loss on revenue of $1.55 billion in same period the prior year.
Helping the company's fourth quarter results was a $195 million gain related to scrapping certain retiree health care and other post-retirement benefits.
“Financial results of companies in Chapter 11 are typically noisy, and I wouldn't be surprised if there were some nonrecurring benefits in the fourth quarter results,” said Kirk Ludtke, senior vice president and analyst at Stamford, Connecticut-based CRT Capital Group.
Visteon has suffered from annual net losses since it was spun off from Ford Motor Co. in 2000.
With annual revenue down nearly 30 percent from 2008, the company took aggressive cost-cutting measures in Chapter 11, including curtailment of retiree health care and life insurance benefits and exiting unprofitable business lines in the United States.
Including all global operations, Visteon ended 2009 with about $1.1 billion in cash.
“Our restructuring, ongoing cost-reduction initiatives and ability to keep overhead costs aligned with reduced sales helped drive significant year-over-year improvements in cash flow and earnings, despite significantly lower vehicle production volumes and challenging industry conditions,” CEO Donald Stebbins said in a statement.
The company also said it benefited from fast sales recoveries at its top two automaker customers: Ford and Hyundai Motor Co.
Ford, the only major U.S. automaker to avoid bankruptcy last year, accounts for 27 percent of Visteon's sales.
Visteon draws another 27 percent of its sales from Hyundai and sister Kia Motors Corp., which along with Subaru were the only major auto brands to increase sales in the battered U.S. market last year.
Since filing for Chapter 11 bankruptcy last May, Visteon has exited most of its U.S. business lines, winding down many U.S. plants after transferring to competitors contracts to supply the Detroit Three automakers as well as Honda and Nissan.
Visteon has to file its second reorganization plan before a March 16 bankruptcy court hearing. The initial plan, which gave Visteon's pre-bankruptcy lenders a 96 percent stake in the reorganized company and nothing to unsecured creditors, met resistance when it was presented in January. The company then agreed to pursue a revised plan.