Lear is instituting additional employee safety measures and enhancing the company’s financial flexibility in light of the substantial impact Covid-19 is having on the automotive industry and the global economy more broadly.
Employee-Related Actions:
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- Requiring non-essential administrative staff to work from home
- Preventing visitors from entering company buildings
- Managing shift changes and staggering lunch breaks to thoroughly disinfect common areas and promote social distancing
- Installing additional hand sanitiser dispensers and more frequently cleaning often-touched surfaces
- Adhering to safety guidelines provided by the World Health Organisation and Centres for Disease Control and Prevention, as well as all orders and directives regarding business operations issued by Federal, State and local authorities
Balance sheet and liquidity actions:
Lear adds it has ample liquidity and no significant near-term debt maturities. However, in light of the highly uncertain environment, the company believes it is prudent to take a series of preemptive actions to further strengthen its balance sheet and enhance its financial flexibility. The board of directors has authorised the following actions:
- Drawing down US$1bn from the company’s US$1.75bn revolving credit facility, which matures in August, 2024
- Temporarily suspending share repurchases
- Temporarily suspending quarterly dividend
The company also is taking action to manage operating costs, capital expenditures and working capital, including eliminating discretionary spending and adjusting production activity in response to rapid declines in industry volumes.
“Lear has a strong balance sheet, which positions us to weather significant industry downturns and uncertain conditions,” said Lear president and CEO, Ray Scott. “During this challenging time, our top priority is the health and safety of our employees and we have instituted new safety protocols at all our facilities globally.
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By GlobalData“We also have dedicated teams working to ensure we will be fully prepared to ramp up our manufacturing operations safely and efficiently when automotive industry production recovers. At the same time, we are proactively managing operating costs and cash flow to minimise the impact of sudden production declines on our profitability and financial position.”
