SOUTHFIELD, Mich. — Lear Corp. has reported financial results for the first quarter of 2009. Net sales of $2.2 billion were down 44 percent from a year ago.
Lear said the business environment in the first quarter was extremely challenging due to significantly lower production volumes globally. In North America, industry production compared with a year ago was down 51 percent. In Europe, industry production was down 40 percent. Globally, automotive production was down 36 percent.
"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 Bob Rossiter, Lear’s chairman, chief executive officer and president. "As a result, production was down sharply in North America and Europe. In this difficult environment, we are minimizing 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 $1.2 billion," Rossiter added. "We remain focused on weathering the current downturn, while positioning ourselves for future success when industry conditions improve."
For the first quarter of 2009, Lear reported net sales of $2.2 billion and a pretax loss of $257.1 million, including restructuring costs and other special items of $121.2 million. Pretax income (loss) before interest, other expense, restructuring costs and other special items (core operating earnings) was negative $66.7 million in the first quarter of 2009. This compares with net sales of $3.9 billion, pretax income of $113.5 million and core operating earnings of $186.5 million in the first quarter of 2008.
The decline in net sales for the quarter, compared with a year ago, primarily reflects the significant decline in industry production in North America and Europe.
In the seating segment, net sales were down 42 percent to $1.8 billion due to significantly lower production volumes. Operating margins declined sharply, reflecting the impact of lower industry production, offset partially by the continued benefits from restructuring and other cost reduction activities. In the electrical and electronic segment, net sales were down 49 percent to $416 million driven by lower production volumes. Operating margins declined significantly, reflecting the impact of lower industry production, offset in part by the continued benefits from the company’s restructuring actions.
Net loss attributable to Lear was $264.8 million, or $3.42 per share, in the first quarter of 2009. This compares with net income attributable to Lear of $78.2 million, or $1 per share, in the first quarter of 2008.
In the first quarter of 2009, free cash flow was negative $219 million, as compared with free cash flow of negative $21.2 million in the first quarter of 2008. The decline in free cash flow compared with a year ago primarily reflects lower earnings. Net cash used in operating activities was $336.8 million in the first quarter of 2009, and net cash provided by operating activities was $136 million in the first quarter of 2008.
The company had approximately $1.2 billion in cash and cash equivalents as of April 4, as compared to approximately $1.6 billion as of Dec. 31, 2008. The decline reflects negative free cash flow in the first quarter, as well as the termination of the company’s accounts receivable factoring facility in Europe. On May 13, the company and the lenders under its primary credit facility entered into an amendment and waiver of covenant defaults through June 30. Discussions with the company’s lenders and others regarding alternatives to address the company’s capital structure are on-going.
