TRW Flies Past Estimates - Analyst Blog

TRW Automotive Holdings Corp. (TRW) reported a profit of $189 million or $1.47 per share (excluding special items) in the third quarter of 2010, beating the Zacks Consensus Estimate by a significant margin of 69 cents per share. The profits more than doubled from $76 million or 68 cents per share (excluding special items) in the third quarter of 2009, driven by higher revenue and lower cost structure of the company.

Revenues in the quarter escalated 10% to $3.43 billion. The company's sales were boosted by higher global vehicle production volumes, offset by the negative impact from fluctuations in currency.     

Excluding restructuring and fixed asset impairment charges, the company's operating income rose $104 million to $269 million from $165 million a year ago. The increase was attributable to improvement in sales, positive impact of the restructuring and cost reduction measures, offset partially by a modest increase in raw material prices.

TRW had cash and cash equivalents of $1.09 billion as of October 1, 2010, up significantly from $474 million in the same period a year ago. Long-term debt amounted to $2.09 billion as of the above date. This reflected a long-term debt-to-capitalization ratio of 62%, flat compared with the same period a year ago.

In the first nine months of 2010, the company had net cash flow of $690 million from operating activities in contrast to an outflow of $57 million in the same period of prior year. The improvement in cash flow was attributable to an increase in net income during the period. Free cash flow was $522 million compared with an outflow of $178 million in the same period last year.

TRW anticipates sales of $14.1 billion for full year 2010, including $3.4 billion for the fourth quarter of the year. The expectations were based on the assumptions for industry production volumes of 11.8 million units in North America and 18.0 million units in Europe.

TRW Automotive, a Zacks #2 Rank (Buy) stock, is a leading manufacturer of advanced technology products and services for the automotive markets. The company operates in 27 countries through its subsidiaries. These operations primarily involve the design, manufacture and sale of active and passive safety related products.


 
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