TRW Q1 profit beats forecasts, raises outlook

By Soyoung Kim

DETROIT (Reuters) - TRW Automotive Holdings Corp (TRW.N: Quote, Profile, Research) posted a better-than-expected quarterly profit on Wednesday as robust sales of auto safety products in China and South America offset sluggish U.S. vehicle production.

TRW also raised its outlook for full-year profit and sales despite an ongoing slump in the U.S. market, still the world's largest, and runaway commodity prices, and its shares were up 5 percent in early trading on the New York Stock Exchange.

TRW, which produces safety equipment such as airbags and electronic stability controls, generates about 70 percent of its sales from Europe, Asia and South America, setting it apart from U.S.-based auto parts suppliers that have heavy exposure to North American production by U.S.-based automakers.

TRW cut its estimates for 2008 North America vehicle production by 300,000 units to approximately 14.2 million vehicles, to be partly offset by higher volumes in emerging markets and Europe.

"As a result of higher commodity costs and record low production volumes in North America, we have a growing concern that the supply base will weaken further," John Plant told analysts and reporters on a conference call.

"I don't expect that we have that much leverage regarding the major steel companies, and therefore we will probably have to accept most of the pricing that is put forward," Plant said.

TRW said it had $55 million in lost sales from a nine-week strike at supplier American Axle & Manufacturing (AXL.N: Quote, Profile, Research), which has at least partly idled about 30 General Motors Corp (GM.N: Quote, Profile, Research) plants.

"We are monitoring the situation closely and are developing contingency plans to address extended downtime at GM if this strike continues or begins to have a more widespread impact," Plant said.