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Delphi posts $2.4 billion loss for 2005

Delphi Corp. has reported a $2.4 billion loss for 2005 in a delayed annual report filed Tuesday with the Securities and Exchange Commission.
/ Source: The Associated Press

Delphi Corp., General Motors Corp.’s largest parts supplier, reported a $2.4 billion loss for 2005 in a delayed annual report filed Tuesday with the Securities and Exchange Commission.

The company, which filed for bankruptcy protection in October, blamed the loss of $4.21 per share on accounting charges, price pressures from a reduction in GM’s North American vehicle production and increased costs for raw materials.

The red ink is an improvement over 2004, when the company had a net loss of $4.8 billion, or $8.59 per share. But the 2004 loss included a $4.7 billion tax write-off in the fourth quarter, the company said.

Revenue fell 6 percent to $26.9 billion, compared with $28.6 billion in 2004.

Delphi’s annual report for 2005 and its first-quarter 2006 earnings were delayed as the company awaited the results of wage and benefit reduction talks with its unions and GM. The company has reported monthly losses to a New York bankruptcy court, but no 2005 annual figures had been released until Tuesday.

The Troy-based company also reported Tuesday that it lost $828 million, or $1.48 per share, in the fourth quarter of last year, compared with a loss of $4.9 billion, or $8.74 per share, in the same period of 2004.

Fourth-quarter revenues were $6.8 billion, a 3 percent drop from the $7 billion in sales during the same period in 2004.

Kevin Reale, research director for AMR Research, an industry consulting company, said only time will tell whether Delphi’s bottom line is truly improving.

The company has to diversify its business to original equipment manufacturers other than the domestic Big Three, Reale said. It also needs to continue its plan to exit commodity-based businesses and focus more on safety, navigation and other electromechanical systems, he said.

“The issue is they don’t want to be fully loaded on business in North America,” Reale said.

The company’s 2005 loss included $629 million in accounting charges that reflect a drop in value for some equipment and plants, the company said.

Delphi’s bottom line should benefit later this year from the departure of 12,600 workers represented by the United Auto Workers who took early retirement offers. The company has replaced some of the workers with people hired at far lower hourly wage rates.

Even more Delphi workers could leave as buyout offers are extended to most of its remaining hourly workers.

“I would think you would see an improved labor cost situation in ‘06 that will be reflected in a smaller loss,” said Craig Fitzgerald, an auto industry analyst with Plante & Moran.