TRW Beats but EPS Down 14% - Analyst Blog

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TRW Automotive Holdings Corp. ( TRW ) witnessed a 14% fall in adjusted earnings per share to $1.72 in the second quarter of 2012 compared to $1.99 in the corresponding quarter last year.

However, it surpassed the Zacks Consensus Estimate of $1.55. In absolute terms, profits declined 16% to $221 million from $264 million in the year-ago quarter.

Reported earnings were $220 million or $1.71 per share compared with $293 million or $2.21. The decline in profits was attributable to a higher effective tax rate along with increased expenditure for future growth initiatives and higher raw material prices.

Revenues in the quarter grew marginally 0.1% to $4.24 billion, surpassing the Zacks Consensus Estimate of $4.19 billion. Strong demand for the company's broad array of active and passive safety products and rise in vehicle production volumes in North America favorable affected revenues. However, lower vehicle production in Europe and the negative impact of currency movements adversely affected revenues.

Gross profit went down 7.9% to $476 million from $517 million in the year-ago quarter. Adjusted operating profits in the quarter dropped 3% to $339 million from $349 million in the prior year. The decline was driven by higher expenditures related to future growth and increased raw material prices.

TRW Automotive's cash and cash equivalents declined to $966 million as of June 29, 2012, compared with $1.24 billion as of December 31, 2011. Total debt declined to $1.47 billion from $1.53 billion as of December 31, 2011.

In the first six months of 2012, the company had cash flow from operating activities of $89 million, a significant decline from $352 million in the year-ago quarter. Capital expenditures increased to $200 million from $167 million a year ago.

TRW Automotive expects total industry production of 14.9 million units in North America and 18.8 million units in Europe for the full year 2012. It also hopes that production volume in China will improve in the future. Based on these production levels and expected foreign currency exchange rates, sales are expected between $16.2 billion and $16.4 billion for the year, including $3.9 billion in the third quarter.

Headquartered in Michigan, U.S., TRW Automotive is one of the world's largest manufacturers of advanced technology products and services for the automotive markets. The company supplies to more than 40 major vehicle manufacturers and 250 nameplate producers.

Together with continuous research and development, the company is well positioned to benefit from the changing demands of both established and emerging markets for advanced and affordable safety solutions. Its major customers include Ford Motor Co. ( F ), General Motors Company ( GM ) and Volkswagen AG ( VLKAY ). Currently, it retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.

FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
TRW AUTOMTV HLD (TRW): Free Stock Analysis Report
(VLKAY): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: F , GM , TRW , VLKAY

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