CHICAGO - Lear Corp., the world's fifth-largest auto parts maker, on Wednesday said its quarterly earnings jumped 46 percent, but it slashed its full-year outlook due to U.S. automakers' production cutbacks.
Auto parts suppliers are braced for painfully steep cuts in vehicle production after General Motors and Ford Motor Co. announced plans to reduce output after U.S. sales of new cars and trucks declined in February.
Analystsalready have lowered their earnings expectations for this year for automotive suppliers, including Lear.
Lear, which makes seating, instrument panels, electrical components and other interior systems, is among the suppliers that have benefited most from an industry trend toward outsourcing the design and assembly of larger modules and systems.
"Overall, we expect that Lear's relatively variable cost structure will help it withstand a production downturn better than most suppliers, but it is not immune," Merrill Lynch analyst John Casesa said in a research note. He maintained a "buy" rating on the stock. Merrill Lynch has provided investment banking services to Lear in the past year.
Lear, of Southfield, Mich., said its first-quarter net income climbed to $67.9 million, or $1.01 a share, from $46.4 million, or 70 cents a share, in the same period a year ago, boosted by new business, a stronger euro and better operating efficiencies.
Analysts' consensus estimate was $1.00 a share, according to Thomson First Call. In January, the company had projected first-quarter earnings would be in the range of 90 cents to $1 a share.
Lear said its sales in the first quarter rose 10 percent to $3.90 billion from $3.53 billion a year ago.
The parts maker cut its full-year profit forecast to $4.85 to $5.25 a share from its January prediction of $5.20 to $5.40 a share, citing the lower production outlook for the industry.
Analysts had been looking for 2003 earnings of $5.11 a share, with estimates ranging from $4.80 to $5.75. Lear earned $4.65 a share in 2002.
It said it expects sales of about $15 billion in 2003, up from $14.4 billion last year, helped by the addition of $900 million in new global business and a stronger euro.
Lear forecast its second-quarter earnings in a range of $1.20 to $1.30 a share, with sales flat to up slightly from a year ago.
The company pegged North America vehicle production at 15.7 million to 15.9 million units in 2003, down from 16.4 million the year before.