TRW Automotive Holdings Corp.
) reported adjusted earnings per share of $1.24 in the third
quarter of 2012 (excluding special items), down 9.5% from $1.37
in the year-ago quarter. Net income declined 11.3% to $157.0
million from $177.0 million in the third quarter of 2011. The
year-over-year decline in earnings was due to higher effective
tax rate. However, profits in the quarter surpassed the Zacks
Consensus Estimate by 8 cents per share.
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Revenues in the quarter edged up 1.3% to $3.96 billion, beating
the Zacks Consensus Estimate of $3.90 billion. Excluding the
adverse impacts of currency translation and divestitures,
revenues improved 9%. The increase in revenues was driven by
rising demand for the company's active and passive safety
products, higher vehicle production in North America and improved
global sales. This was partially offset by lower vehicle
production in Europe and adverse effects of currency
Adjusted operating profits in the quarter went up 10.4% to $265.0
million from $240.0 million in the prior year. The increase was
driven by improved sales volume and lower legal expense,
partially offset by increase in costs to support future growth
and adverse impacts of currency translation.
TRW had cash and cash equivalents of $973.0 million as of
September 28, 2012 compared with $1.24 billion as of December 31,
2011. Total debt was $1.46 billion as of September 28, 2012
versus $1.53 billion at the end of 2011. Debt-to-capitalization
ratio improved to 29.1% as of September 28, 2012 from 34.1% as of
December 31, 2011.
Cash flow from operating activities declined to $245.0 million in
the first nine months of 2012 from $512.0 million in the same
period of 2011. Capital expenditures increased to $325.0 million
from $304.0 million in the first nine months of 2011.
Consequently, free cash flow deteriorated to the use of $80.0
million from an inflow of $280.0 million a year ago due to
increased payments for benefit plans, higher taxes and lower
For full year 2012, TRW anticipates production of 15.2 million
units in North America and 18.7 million units in Europe. The
company is optimistic that China and Rest of World will also
register growth in production volume. Based on these production
levels and expected foreign currency exchange rates, sales are
expected between $16.2 billion and $16.3 billion for the year.
TRW Automotive is a leading manufacturer of advanced technology
products and services for the automotive markets. Headquartered
in Michigan, U.S., the company operates in 26 countries through
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.
General Motors Company
). The three customers account for nearly 50% of sales.
Currently, the company retains a Zacks #3 Rank on its stock,
which translates to a Hold rating for the short term (1 to 3
months), and we have reiterated our Neutral recommendation on its
shares for the long term (more than 6 months).