Auto parts maker has reported a narrower quarterly net loss as its strengthening seating business outran weakness in its interiors unit.
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For the second half of 2006, Lear expects North American production on its top 15 vehicle platforms to be down 7%, Reuters reported, adding that the company also expects materials and energy prices to stabilise and its restructuring to yield increasing benefits in the second half of the year.
For the second quarter, Lear reportedly said losses in interiors more than doubled from a year earlier and earnings in its electronics business declined as costs for steel, resins, copper and oil increased.
“There was year-over-year improvement, but they remain in a tough spot,” Morningstar analyst John Novak told the news agency, adding: “Commodity costs were just brutal.”
According to Reuters, Lear’s net loss for the second quarter narrowed to $US6.4million, or 10 cents a share, from $44.4m, or 66 cents per share, a year earlier, when it took charges for restructuring, impairment and litigation.
Second-quarter sales rose 8.8% to $4.81bn, compared with analysts’ average forecast of $4.56 billion, the report noted. Sales were supported by new business globally that offset lower production of key vehicles in North America and Europe.
Seating sales rose to nearly $3.1 billion in the quarter from $2.88 billion a year earlier, and earnings more than tripled. Electronics sales rose to $787.7m from $772.4m, but earnings dipped to $38m from $52.2m, Lear said.
Interiors sales rose to $926.4m from $767m, but the loss widened to $37.2m from $17.8m on price pressures, high raw materials costs, inefficiencies in the launch of new business, and excess capacity, Lear said, according to Reuters.
The news agency noted that, earlier this month, Lear announced plans to sell its European interiors business to a joint venture of billionaire investor Wilbur Ross – who has confirmed that he is in talks to acquire the supplier’s North American interiors business as well.
