Supplier eyes success in changing industry after long bankruptcy
David Shepardson / The Detroit News
Detroit -- Delphi Holdings LLP Chief Executive Rodney O'Neal said Wednesday the Troy-based auto supplier has no immediate plans to go public.
The new Delphi "is poised for growth and poised for prosperity," O'Neal said at the Automotive News World Congress in his first speech since the company emerged from four years of bankruptcy in October.
The privately held company was purchased by its bankruptcy lenders with support from its former parent, General Motors Co. The bankruptcy cost nearly $500 million.
O'Neal called the company's difficult bankruptcy "a double-feature X-rated horror movie with 7.1 surround sound thumping down in full volume, gloom and doom."
Delphi, which was spun off by GM in 1999, filed for bankruptcy in October 2005. At the time, it had $29 billion in annual revenue, 27 business units and 184,000 employees. Since then, it has cut 90,000 workers worldwide.
GM now accounts for less than 20 percent of Delphi's revenue worldwide.
Revenues are about half of what they were under the old company -- or under $15 billion. But the company is poised for profitability at a lower revenue level, and with a stronger balance sheet, O'Neal said. Delphi radically cut its costs and debt; eliminated two of its seven divisions; cut its business units from 27 to 10; and reduced its product lines from 119 to 38.
O'Neal said the company needs to make additional cuts in Western Europe.
The auto industry as a whole, he said, is "just fat."
Analysts say the global auto industry has the capacity to produce 86 million vehicles, but "we're only going to sell right around 50-60 million," O'Neal said.
"Imagine the fun we are going to have when all this is behind us and things are looking well," he said. "We're a much more focused company around the hot space of safety, the hot space of green and the hot space of connectivity."
O'Neal said the company's owners will determine the timing of an initial public stock offering.
"Our team is clearly focused on creating value through growing both the top line and the bottom line of the company," he said.
"What doesn't kill makes you stronger," O'Neal said. "We are stronger as a company, as a team, but we aren't done yet."
http://www.detnews.com/article/20100114/AUTO01/1140427/1148/auto01/Halved-Delphi--poised--to-profit
