US: Restructured Lear reports Q4 and full year results

Seating specialist Lear Corporation reported fourth quarter net sales of US$2.7bn and pretax income of $1,194m, including a gain related to reorganisation items and fresh start accounting adjustments of $1,513m, a goodwill impairment charge of $319.0m and restructuring costs of $59.3m. Income before interest, other expense, income taxes, restructuring costs and other special items (core operating earnings) was $115.5m in the fourth quarter of 2009. This compared with net sales of $2.6bn, a pretax loss of $682.9m, including a goodwill impairment charge of $530.0m, and core operating earnings of $22.0m in the fourth quarter of 2008.

In the seating segment, net sales were up 5% to $2.2bn, primarily driven by favorable foreign exchange. Operating margins improved significantly, reflecting favorable cost performance and the benefit of operational restructuring savings. In the electrical power management segment, net sales were up 8% to $569m, primarily as a result of the improved production environment and favorable foreign exchange. Operating margins improved significantly, reflecting the increase in sales, favorable cost performance and the benefit of operational restructuring savings.

For full year 2009, Lear reported net sales of $9.7bn and pretax income of $832m, including a gain related to reorganization items and fresh start accounting adjustments of $1,475m, a goodwill impairment charge of $319.0m and restructuring costs of $160.0m. Core operating earnings were $106.8m in 2009. This compared with net sales of $13.6bn, a pretax loss of $578.6m, including a goodwill impairment charge of $530.0m, and core operating earnings of $418.4m in 2008.

The decline in net sales for the full year reflected a significant reduction in production in North America and Europe and unfavorable foreign exchange. The decline in core operating earnings reflected the decline in net sales offset in part by favorable cost performance, including the benefit of operational restructuring actions, Lear said.

On 7 July, 2009, Lear filed for bankruptcy and on 9 November emerged from Chapter 11 with substantially lower total debt obligations and an improved credit profile.

Approximately 70% of Lear's 2009 net sales were generated outside of North America.

Lear expects 2010 global net sales in the range of $10.2bn to $10.7bn and core operating earnings of $250m to $350m. Operational restructuring costs in 2010 are estimated to be about $110m.

It expects vehicle production of approximately 10.5m units in North America and 15.4m units in Europe and an exchange rate of $1.40/euro.