Wachovia Securities has cut Lear Corp. to market perform from outperform after the maker of car seats pre-announced a significant earnings shortfall in the first quarter, Dow Jones reported.
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The broker reportedly told clients that key production platforms remain weak and raw material pressures are not abating. “We believe, the shares have few, if any, catalysts near-term,” Wachovia concluded.
Lear on Tuesday revised its first-quarter 2005 net income guidance from a range of $US0.50 to $0.70 per share to about break-even, primarily reflecting additional industry production cuts, largely in North America.
Lear’s previous first-quarter net income guidance was based on an expected decline in North American production of about 5%, compared with the same period a year ago. Since then, production schedules have continued to decline, with a disproportionate concentration in vehicle platforms where Lear has substantial content.
Additionally, the company is experiencing continuing cost pressures from its supply base.
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By GlobalData“While we expect 2005 to be challenging on several fronts, we do expect the industry production environment to improve later in the year following this near-term inventory correction,” said Lear chairman and CEO Bob Rossiter in a statement.
“With our strong sales backlog and a company-wide emphasis on improving our cost structure, our longer-term outlook remains positive.”
