VAN BUREN TOWNSHIP, Mich. — Visteon Corporation (NYSE: VC) today announced financial results for 2010, reporting full-year sales of $7.47 billion, an increase of $781 million or 12 percent compared with 2009. Net income for full year 2010 was $1.03 billion and included $933 million of net reorganization gains in connection with the company's emergence from Chapter 11 on Oct. 1, 2010. Adjusted EBITDA for full year 2010 was $614 million, an increase of $160 million compared with $454 million for 2009. For full year 2010, the company generated $174 million of cash from operating activities, an increase of $33 million compared with 2009.
“Our full-year financial results significantly improved from last year, reflecting our ongoing operational actions, benefits from our restructuring initiatives and an upswing in global vehicle production volumes,” said Donald J. Stebbins, chairman, chief executive officer and president. “We capitalized on sales growth in China and other emerging markets through our extensive manufacturing and engineering presence in these key regions.”
Full Year 2010 Results
Product sales for full year 2010 were $7.32 billion, up $903 million, or more than 14 percent, from 2009, reflecting higher customer vehicle production volumes and favorable currency. The improved production environment was partially offset by the impact of divestitures and plant closures completed in 2009 and the first half of 2010, which reduced product sales by $422 million. Approximately 29 percent and 25 percent of 2010 product sales were to Hyundai-Kia and Ford, respectively. Renault-Nissan and PSA Peugeot-Citroen collectively accounted for about 14 percent of sales. On a regional basis, Asia Pacific and Europe accounted for 40 percent and 36 percent of total product sales, respectively, while North America accounted for 18 percent and South America 6 percent.
Gross margin for 2010 was $809 million, increasing $212 million over full year 2009. Gross margin for full year 2010 included $198 million of savings related to the termination of company-paid medical, prescription drug and life insurance coverage under certain U.S. other post-retirement employee benefit (“OPEB”) plans, which was $65 million higher than similar savings recognized in 2009. The remaining year-over-year increase of $147 million reflected higher production volumes and improved net cost performance, partially offset by divestitures and plant closures, unfavorable currency and inventory valuation adjustments associated with the adoption of fresh-start accounting.
Selling, general and administrative expenses for 2010 totaled $395 million compared with $331 million for 2009, an increase of $64 million. This increase is attributable to the impact of OPEB terminations that provided a savings of $62 million in 2009, compared with a net expense of $5 million in 2010. In addition, net cost efficiencies of $53 million achieved in 2010 were partially offset by unfavorable currency and increased employee performance incentive costs of $50 million.
Equity in net income of non-consolidated affiliates of $146 million for full year 2010 represented a $66 million increase over 2009. Equity in net income is mainly derived from Visteon's Asian joint venture partnerships, principally Yanfeng Visteon Automotive Trim Systems Co., Ltd. The increase in 2010 reflects significantly higher vehicle production in China.
Visteon reported net income of $1.03 billion for full year 2010, including net reorganization gains of $933 million. Net reorganization gains included $956 million related to the settlement of obligations previously recorded as liabilities subject to compromise and $106 million related to the adoption of fresh-start accounting, partially offset by reorganization costs of $129 million. Adjusted EBITDA, as defined below, of $614 million for 2010 represented an increase of $160 million over full year 2009. Higher vehicle production volumes, net of unfavorable currency and the impact of divestitures and plant closures, increased adjusted EBITDA by $152 million. In addition, positive net cost performance and higher equity income from Visteon's Asian non-consolidated joint ventures provided a further increase of $112 million. These increases more than offset higher employee performance incentive costs of $67 million and net income attributable to non-controlling interests of $19 million, principally reflecting the 30 percent minority interest in Halla Climate Control Corporation.