Visteon is the visionary-sounding name Ford Motor bestowed on its automotive components unit when it was spun off in 2000. One of the largest auto parts makers in the US, the company has evolved to operate three business groups: Climate Control (climate systems, powertrain cooling systems); Electronic Products (audio systems, driver control systems, infotainment systems, powertrain and feature control modules); and Interior Products (cockpits, door modules, consoles). Ford represents about 25% of sales; Visteon also provides products and services to aftermarket customers. More than 80% of its sales are made outside the US.
Visteon has corporate offices in Van Buren Township, Michigan; Shanghai; and Chelmsford, UK. It operates through 120 facilities worldwide in 30 countries. Asia is its largest market, accounting for 47% of its total sales in 2013. Europe and North America follow, with 31% and 16% of sales, respectively.
Visteon's Climate Control segment makes climate systems and powertrain cooling systems and generates 64% of total sales. Interior Products makes cockpits, door modules, and consoles and contributes 17%, while Electronic Products offers audio systems, driver control systems, and powertrain and feature control modules, generating 19%.
Sales and Marketing
While Ford represents a quarter of Visteon's business, the Hyundai Kia Automotive Group tops that, commanding around 30% of the company's revenues. Visteon provides components to a lion's share of the top global automotive OEMs -- Daimler, Honda, Toyota, and Volkswagen is the short list.
Visteon's balance sheet has experienced some ups and downs over the years. After experiencing a drop in revenue in 2012, Visteon posted a 8% surge in revenue from $6.9 billion in 2012 to roughly $7.5 billion in 2013. The growth for 2013 driven by higher Climate and Electronics sales due to higher production volumes in Asia, North America, and Europe.
The company's profits plunged significantly (92%) from $1 billion in 2011 to a paltry $80 million in 2012. However, in 2013 profits surged by a whopping 590% to peak at $690 million. This was primarily due to $465 million in gains it made on the divestiture of its 50% interest in a Chinese joint venture.
Visteon's cash flow from operations has consistently grown over the years. Cash flow increased by $73 million from 2012 to 2013 as higher cash dividends from non-consolidated affiliates contributed $83 million of the increase.
Visteon has been reorganizing and getting rid of extraneous divisions and units in order to focus on its more profitable operations. As part of a strategic reorganization, Visteon in 2014 announced it will separate the portion of its Interiors business conducted through its facilities in Chennai and Pune, India, into a new legal entity, which will be transferred to the holding company and sold to the buyer.
The company in 2013 sold its 50% ownership interest in its Chinese joint venture Yanfeng Visteon Automotive Trim Systems Co. to Huayu Automotive Systems Co. for $840 million. It also expects to earn about $116 million in additional after-tax proceeds in 2014 and 2015 as a result of the transaction.
In 2012 Visteon sold its automotive lighting operations to Varroc Group, a fellow provider of automotive parts, for $72 million in cash. The business included front and rear lighting systems and auxiliary lamps and key parts such as projectors and electronic modules. The divesture allowed Visteon to focus on its most lucrative business segment: Climate Control. Visteon also wishes to concentrate on the more profitable products within its Electronic Products operations.
Mergers and Acquisitions
Visteon also uses acquisitions as a means for fortifying its core operations. In mid-2014 it paid $265 million to purchase the automotive electronics business of Johnson Controls. The deal gave Visteon seven research and development centers in Europe, North America, and Asia and further diversified and expanded its global customer base.