Lear Corporation has revised its 2008 financial outlook based on lower North American vehicle production and increased commodity costs.
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Since the last outlook on 29 April, Lear’s major customers, industry forecasting services and others have announced downward revisions in their estimates for 2008 North American vehicle production based on lower sales rates for full-size pickup trucks and large sport utility vehicles.
Lear consequently revised its 2008 forecast from approximately 14.1m vehicles to approximately 13.8m. In addition, raw material costs, particularly costs related to steel, have continued to increase.
As a result, Lear revised its sales outlook down to approximately $15.3bn, from $15.5bn and expects income before interest, other expense, income taxes, restructuring costs and other special items (core operating earnings) to a range of $600 to $640m from the previous range of $660 to $700m.
Lear is also increasing its estimated restructuring investment for 2008 to about $125m.
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By GlobalData“Lear is continuing to evaluate and aggressively implement cost reductions and restructuring actions to mitigate the impact of lower production volumes and rising commodity prices,” the supplier said in a statement.
“Furthermore, the production realignment initiatives recently announced by certain North American manufacturers are anticipated to require further restructuring investments in future years.”
“Industry conditions in North America have continued to be challenging, with the lowest expected production volumes since the early 1990s and unprecedented increases in raw material and energy costs,” said company chairman Bob Rossiter.
“Like our customers, we are continuing to aggressively realign our capacity and implement structural cost reductions to improve our longer-term competitiveness.
“We are also expanding our operations outside North America, which represented approximately 55% of our net sales in 2007.”
