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Production cuts in North America by GM, Ford and Chrysler will result in a reduction in Lear’s 2006 net sales of around $US300m.
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The effect will be about a 15% reduction in core operating earnings (income before interest, other expense, income taxes, restructuring costs and other special items).
Lear had previously forecast $18bn in net sales this year, and $400-£440m in core operating earnings. The supplier generates around half of its revenue from GM and Ford.
“We know our customers and our shareholders expect us to operate as efficiently as we can, and we are proactively looking at every aspect of our business for further improvement,” said Lear chairman and CEO Bob Rossiter.
“While we remain positive about the longer-term outlook, we are taking additional steps now to ensure that we remain financially strong and even more competitive in the long run.”
While the production cuts will adversely impact both the third and fourth quarters and each of Lear’s business segments, about two-thirds of the decline is in the fourth quarter and a disproportionate amount is in the interior segment.
Lear has been looking for a partner for its interior systems business since last year and has been working with billionaire investor Wilbur Ross on a possible joint venture, according to the Detroit News.
Lear will release Q3 results on 26 October.
