updated 5/13/2005 11:25:53 AM ET 2005-05-13T15:25:53

Delphi Corp., the world’s largest auto parts maker, reported a first-quarter loss on Friday versus a profit a year ago as results were hurt by weak production volumes with some North American customers and its inability to record a deferred benefit of its U.S. losses.

Delphi posted a loss of $409 million, or 74 cents per share, for the January-March period compared with earnings of $53 million, or 9 cents per share, last year. The company’s decision to no longer record the tax benefit associated with its U.S. losses resulted in the exclusion of about $190 million of tax benefit.

Excluding restructuring charges, the company reported a loss of $378 million, or 68 cents per share, in the latest period, compared with earnings of $122 million, or 22 cents per share, a year ago.

Revenue fell 7 percent to $6.9 billion from $7.4 billion last year.

Analysts surveyed by Thomson Financial were looking for a much smaller loss of 31 cents per share on sales of $6.78 billion.

“Versus our expectations for the first quarter, we were significantly challenged by weaker-than-expected production volumes with some of our larger North American customers,” said J.T. Battenberg III, Delphi’s chairman and chief executive officer. “We expect these pressures to continue for the remainder of the year.”

Delphi said non-GM revenue reached a record high of 51 percent of quarterly revenue, up from 43 percent a year ago. Non-GM sales rose 8 percent at $3.5 billion from $3.2 billion in the 2004 period.

“Like many other companies in the automotive sector, Delphi’s first-quarter performance was impacted by high commodity costs year-over-year and low production volumes, particularly with GM North America,” said John D. Sheehan, Delphi’s acting chief financial officer. “We are engaging our entire global workforce to identify additional opportunities to reduce SG&A and discretionary spending so that we can focus on our restructuring activities and overall transformation.

Looking ahead, Delphi said second-quarter revenue is projected to range between $7.2 billion and $7.4 billion, in line with analysts’ consensus estimate of $7.25 billion. Margins are expected to improve slightly due to the sequential revenue increases. Also in the second quarter, Delphi is required to make a minimum contribution of $600 million to fund U.S. pensions.

However, the company lowered forecasts for calendar-year GM North America production volumes by 6 percent to 8 percent — which will impact yearly revenue by $900 million to $1.1 billion. Delphi also said that while it is beginning to gain traction on its material cost reduction initiatives, so far the company has had slower-than-expected success in these areas.

Therefore, the company stated that it doesn’t believe that prior guidance for full-year losses of $350 million, including $150 million in restructuring charges, is achievable.

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