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UPDATE 1-Delphi expects vehicle safety system sales to jump 50 pct for years
February 5, 2015 / 5:08 PM / 3 years ago

UPDATE 1-Delphi expects vehicle safety system sales to jump 50 pct for years

(Adds record share price, advanced safety systems revenue forecast)

By Bernie Woodall

DETROIT, Feb 5 (Reuters) - Delphi Automotive Plc said sales of advanced vehicle-safety systems would jump 50 percent annually for the next several years, sending the auto supplier’s shares up to a record high Thursday.

The outlook by once-bankrupt Delphi highlights a shift among big auto suppliers to the design of software-powered vehicle systems from the manufacture of mechanical parts.

Advanced safety systems include collision-avoidance technology and semi-automated control of braking, steering and other vehicle functions. Delphi said its new business was with large European and North American automakers and included radar and vision sensors.

Kevin Clark, who will take over the reins as Delphi chief executive on March 1, said the company’s advanced safety business - which it calls active safety - will surge 50 percent this year in terms of sales, from $160 million in 2014, and at the same rate for the next several years.

“Software is becoming a bigger component of our product portfolio, without a doubt,” said Clark, who is currently the company’s chief operating officer, during a conference call following the release of its quarterly results.

Still, Clark said the advanced safety business represented only a small part of the company’s revenue, which grew 3.4 percent in 2014 to $17.02 billion, but would be key in Delphi’s sales and profit margin growth for years.

Clark will take over from Rodney O‘Neal, who has been Delphi chief executive since January 2007. The company entered bankruptcy in 2005 and emerged from it in 2009. Delphi was spun off from General Motors in 1999.

Shares were up 3.5 percent at $75.30 in midday trading, after earlier having risen as much as 4.3 percent to a high of $75.88.

Delphi’s profit margins in its advanced safety business, analysts have said, could be three times the profit margins achieved in 2014 by major automakers.

The company’s profit margin for the fourth quarter was 12.5 percent, up from 11.3 percent a year earlier.

Excluding special items, Delphi earned $1.32 per share in the quarter, beating the $1.27 per share expected on average by analysts polled by Thomson Reuters I/B/E/S.

Net income rose 13 percent in the quarter to $344 million, or $1.16 per share, from $298 million, or 97 cents per share, a year earlier.

Revenue 18 percent in South America and 11 percent in Europe while rising 10 percent in Asia and 6 percent in North America.

Business booked last year totaled $25.1 billion, which was split about evenly between Asia, Europe and North America, followed by 4 percent in South America, the company said.

Editing by W Simon and Bernadette Baum

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