US: Lear Q4 "dramatically impacted" by global slowdown
Lear Corporation admitted yesterday that the decline in automotive production had "dramatically impacted" its fourth quarter financials.
The auto supplier reported fourth quarter net sales of $2.6bn and a pretax loss of $692.1m, driven largely by a non-cash goodwill impairment charge of $530m and restructuring costs of $66.2m.
These figures compare with net sales of $3.9bn, pretax income of $45.1m in the fourth quarter of 2007. The decline in net sales for the quarter primarily reflects a significant reduction in production in North America and Europe.
In the seating segment, net sales were down 32% to $2.1bn.
"Operating margins declined sharply, reflecting primarily the impact of lower vehicle production offset partially by favourable cost performance," the company said.
In the electrical and electronic segment, net sales were down 33% to $529m.
Net loss was $688.2m for the fourth quarter of 2008. This compares with net income of $27m, or $0.34 per share, in the year earlier quarter.
"These sharp declines in automotive production in North America and globally dramatically impacted our financial results in the fourth quarter," said Bob Rossiter, Lear's chairman, chief executive officer and president. "We have been aggressively restructuring our global operations in response to changing business conditions. Lear's strategy to manage through the downturn is to accelerate and expand global restructuring and cost reduction efforts, to narrow our investment focus to minimise cash burn and to continue to provide our customers with superior value."
For the full year 2008, Lear reported net sales of $13.6bn and a pretax loss of $604.1m. Core operating earnings were $418.4m for the full year 2008. This compares with net sales of $16.0 bn, pretax income of $331.4m and core operating earnings of $748.5m in 2007.
"The decline in net sales for the full year primarily reflects a significant reduction in production in North America and Europe and the divestiture of the interior business, partially offset by favourable foreign exchange. The decline in core operating earnings reflects the decline in net sales offset in part by favourable cost performance, including the benefit of restructuring actions.
Lear reported a net loss of $689.9m for the full-year 2008. This compares with net income of $241.5m, or $3.09 per share, for the full-year 2007.