Visteon’s new Chief Executive Officer, Tim Leuliette, has promised greater clarity in the future with regard to strategy at the company’s operating units.
In an interview with Reuters, Leuliette indicated that this would be provided by the end of 2013 although he stressed: “Clarity doesn’t mean that all of the execution will be accomplished but that the clarity will be there.”
He also added: “There are so many great assets here and you can pick a nice path, but it’s the execution that’s always been fraught with challenges. There are times when you have to move it from the too-tough-to-handle file to the front of the desk and get on down the road. You know me: I don’t have all the patience in the world.”
Leuliette already outlined in a presentation to investors at the Citi Global Industrials Conference on 19 September what was described as a “value-creating action plan for each key business and joint venture.” This indicated the company plans to sell its climate business to Halla Climate Control (HCC) for cash, thereby creating the Halla-Visteon Climate Group (HVCG). In addition, it outlined plans to sell the interiors unit and to exit its 50% stake in Yanfeng Visteon Automotive Trim Systems (YFV), the Chinese joint venture with Huayu Automotive Systems (HASCO), owned by SAIC Motor. This stake will be disposed of when the company views it can secure the “right value” at the “right” time. The company also will consider options for its electronics business. Rothschild and Goldman Sachs have been engaged by Visteon to “pursue strategic options to enhance customer, partner and shareholder value.”
In the presentation, Leuliette described Visteon as: “An Asian-centric company, with European operations, and limited North American presence.” Around 43% of Visteon’s consolidated revenue is now generated in the Asia-Pacific region, followed by Europe with 34%, North America with 17% and South America with 6%. Including non-consolidated revenue (Yangfeng Visteon), the Asia-Pacific portion rises to 66%.
In the first six months of 2012, the company’s Climate unit generated 60% of consolidated revenue, with Interiors and Electronics contributing 22% and 18%, respectively. Hyundai/Kia remained the largest customer, accounting for 32% of revenue, followed by Ford (27%), Renault/Nissan (9%) and PSA Peugeot Citroen (5%).
The company’s Climate business includes 70% ownership of HCC and Visteon’s own climate unit. Together they rank number two, with a share of 13%, in the global climate business behind Denso and are one of the only two full-line suppliers. By selling the climate business to HCC, Visteon will “have taken half of this company and made it an Asian-traded equity,” Leuliette said in the interview. Leuliette indicated in the 19 September presentation that consolidation of the two operations into one had been a major customer demand. Target transaction completion is during Q1 2013. HVCG will be headquartered in South Korea with global customer presence and Korean leadership supported by an international management team. The plan is to transfer limited S,G&A and operating resources to make the business globally “self-capable.”
Leuliette added in the interview: “Connect the dots. As we sell off Yanfeng, as we address our interiors piece [described as remaining non-core], move climate to Asia, you start to see that the electronics piece will determine Visteon’s future. At that point we become very Asian-centric, and from the shareholder perspective, they should benefit from that.” Visteon’s auto-electronics unit has a number five global market position.
According to the Reuters report, Visteon will report results from YFV for the first time when it files its 2012 annual report in 2013. That pending disclosure has been a “catalyst” for SAIC and Visteon to talk, Leuliette noted, adding “Yanfeng Visteon is a tremendously powerful piece [of SAIC]. Perhaps there’s a point where they may not want the pieces to be all public.”
