CHICAGO -- Lear Corp., the No. 3 U.S. auto parts supplier, on Monday said its quarterly earnings rose 12 percent on new business and the strong euro.
"The company continues to perform well," said Mark Oline, managing director for Fitch Ratings, which initiated coverage of the company in September with an investment-grade rating of BBB- on its senior debt.
The maker of auto interiors said its fourth-quarter net income climbed to $132.4 million, or $1.90 a share, from $118 million, or $1.76 a share, a year ago.
Lear said a lower income tax rate and lower interest expense also drove earnings growth.
Fourth-quarter sales increased to $4.26 billion from $3.76 billion.
The Southfield, Mich., maker of automotive seats, interior trim and electrical systems benefited from the popularity of sport utility vehicles that offer more seating and from a general trend toward upgrading automotive interiors.
"U.S. manufacturers in particular are paying a lot more attention to interiors as a selling point," said Oline.
Interior component manufacturers such as Lear and rival Johnson Controls Inc. tend to have higher profit margins than some other suppliers because their operations are closely integrated with the automakers, Oline said.
Lear said it expects first-quarter net income in the range of $1.10 to $1.20 a share on sales growth of 10 percent to 12 percent.
The projection includes expenses for facility consolidation, the company said.
A Lear spokeswoman said the company spent $37 million in the fourth quarter to improve plant efficiency and reduce production capacity, and expects to spend another $45 million in the first half of 2004.
Lear also confirmed its forecast for 2004 earnings in the range of $5.85 to $6.25 a share on sales of $16.2 billion.
Earlier this month, the company said its five-year sales backlog had grown to $4.4 billion for 2004 through 2008 from $4 billion for 2003 through 2007.
"We're sporting the best backlog we've ever had," Bob Rossiter, Lear chairman and chief executive, said on a conference call with investors and analysts.