Seating and electronic/electrical equipment supplier Lear Corporation has booked a first quarter 2009 pretax loss of $257.1m, including restructuring costs and other special items of $121.2m, on net sales of $2.2bn, down 44% year on year.
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Pretax income was $113.5m in Q1 2008. The operating loss was $66.7m compared with earnings of $186.5m the previous year.
“The business environment in the first quarter was extremely challenging due to significantly lower production volumes globally,” Lear said in a statement. North American industry production was down 51%, Europe was off 40% and, worldwide, output fell 36%.
“Given the adverse economic conditions and dramatic slowdown in automotive demand at the end of last year, many of our major customers had extended plant shutdowns in the first quarter,” said chairman, CEO and president Bob Rossiter. “As a result, production was down sharply in North America and Europe. In this difficult environment, we are minimising our operating costs and accelerating our restructuring efforts.”
“Despite these challenges, Lear continued to make progress on its operating priorities, including further diversification of its global sales, business development in emerging markets and continued new product innovation. We have global scale and excellent technical capabilities in critical product lines, as well as a competitive low-cost footprint, a solid backlog of new business and a strong cash position of $1.2bn,” Rossiter added. “We remain focused on weathering the current downturn, while positioning ourselves for future success when industry conditions improve.”
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By GlobalDataIn Lear’s seating segment, net sales were down 42% to $1.8bn due to significantly lower production volumes. Operating margins declined sharply, too, reflecting the impact of lower industry production, offset partially restructuring and other cost reductions.
In the electrical and electronic segment, net sales were down 49% to $416m, also due to lower production volumes.
Lear booked a net loss of $264.8m, or $3.42 per share, in the first quarter compared with net income of $78.2m, or $1.00 per share, in the same period of 2008.
The supplier said it had approximately $1.2bn in cash and cash equivalents on 4 April compared to about $1.6bn on 31 December. The decline was due to negative free cash flow in the first quarter and the termination of its accounts receivable factoring facility in Europe.
On 13 May Lear and the lenders under its primary credit facility agreed an amendment and waiver of covenant defaults until 30 June.
“Discussions with the company’s lenders and others regarding alternatives to address [our] capital structure are on-going,” Lear said.
