Lear has reported first-quarter net income down to US$76m from US$229m, while sales fell to US4.5bn from US$5.2bn.
“The COVID-19 pandemic has taken a tremendous toll on people around the globe and Lear’s deepest sympathies go out to all those who have been impacted by this crisis,” said Lear president and CEO, Ray Scott.
“I am proud Lear has been at the forefront in supporting pandemic relief efforts through the manufacture and donation of masks and other personal protective equipment to hospital staff and first responders. We will continue to lend our support to communities in need as this humanitarian crisis unfolds.
“Our first quarter financial results were significantly impacted by production disruptions stemming from the COVID-19 pandemic. We experienced plant shutdowns in China beginning in late January that were followed by shutdowns of almost all our global operations outside of China beginning in mid- to late-March. Excluding the impact of COVID-19, Lear’s results reflect solid financial performance in both of our business segments.
“While significant near-term challenges remain, I am confident in the strength of our underlying business, long-term competitive position and liquidity.”
Industry disruptions related to the COVID-19 pandemic during the first quarter impacted operations in all major markets.
Global vehicle production declined by 23% compared to a year ago, with China down 47%, Europe down 19% and North America down 10%.
COVID-19 response and update:
Lear’s operations in China were the first to be impacted by COVID-19, and most plants in the country were closed for several weeks during the quarter. By the end of the quarter, all of operations in China were open, and capacity utilisation was increasing. Beginning in mid-March, operations in Europe, North America, South America and Asia (excluding China) were impacted, with virtually all plants closed at the end of the quarter and closures continuing throughout April and, in most cases, into May.
While manufacturing has resumed at certain locations in Europe and North America, production levels at these facilities are currently well below capacity. As a result, second quarter sales, earnings and cash flows are expected to be materially impacted.
“During the COVID-19 pandemic, Lear’s top priority is ensuring the health and safety of our employees, and we have taken several steps toward this end, including restricting business travel, preventing visitors from entering company facilities, enhancing disinfection of work areas, promoting social distancing and requiring office employees to work from home,” added a Lear statement.
“Lear is taking proactive steps to plan for the safe return to work for our plant and office employees in regions currently subject to shut downs. Building on lessons learned in China, Lear created a Safe Work Playbook to ensure employees feel safe, prepared and informed when they return to work.
“The Playbook outlines practical guidelines for creating a safe workplace and offers insights into navigating COVID-19-related operational challenges. The Safe Work Playbook was published on Lear’s website at Lear.com to share with all organisations dealing with COVID-19.”
Lear is also working with global customers and supply chain to help the industry prepare for the challenges associated with restarting manufacturing facilities. As part of these efforts, the company has embarked on an evaluation of its supply base to identify and address any gaps which could impact the restarting of production.
Lear is also providing support to government agencies and industry trade groups and advising State and local government leaders on best practices related to safely and efficiently resuming production.
Lear 2020 financial outlook:
On 26 March, 2020, the supplier withdrew its previously-issued full year 2020 guidance. At this time, Lear is not providing 2020 guidance due to the significant level of business uncertainty caused by the COVID-19 pandemic.