TRW Chief Says Wall Street Profit Forecast for 2002 May Be Too Low

TRW Inc. Chief Executive David Cote said analysts’ profit estimates for next year may be too low because of demand for defense-related products and cost cutting at the company’s automotive businesses.

Cote declined to give an earnings forecast in an interview with Bloomberg Television. TRW is expected to earn $2.40 a share in 2002, the average forecast of analysts surveyed by Thomson Financial/First Call.

Profit at TRW, the second-largest maker of air bags, has been hurt by cuts in production by North American auto companies. TRW has fired more than 1,000 auto-parts workers this year and said it will consolidate operations to reduce expenses. Demand for the company’s command and control systems, surveillance work and space products will bolster results, Cote said.

“We’re having to add thousands of people for all the support we’re getting,” Cote said. “We’re advertising for a lot of people” in newspapers such as the Los Angeles Times and Washington Post.

The Cleveland-based company makes command and control systems and products used in military surveillance. It also makes displays for military jets and warning systems for missile defense.

Shares of TRW fell 55 cents to close at $32.45 on the New York Stock Exchange. They’ve dropped 16% this year.

Pierre Chao, an analyst with Credit Suisse First Boston, reduced his profit forecasts Tuesday for this year and next because of an expected sales slowdown in TRW’s commercial aerospace business and weak demand in the automotive unit.

Airlines are reducing plane orders and have cut flight schedules by about 20% after terrorists used hijacked planes for assaults on the World Trade Center and Pentagon last month.

Chao reduced his profit forecasts to $2.25 from $2.50 a share this year and to $2.20 from $2.75 for 2002. The analyst, who has a “hold” rating on TRW and doesn’t own the company’s shares, also dropped his aircraft-related sales forecast to $1.06 billion from $1.13 billion for this year.