Lear's Q2 net income surges 6% to $331 million
Lear Corp. posted a 6 percent increase in profit for the second quarter due to the addition of new business in both of its product segments and the addition of Grupo Antolin's seating business last year.
The auto seating and electronics supplier, of Southfield, Mich., reported net income of $331.4 million on revenue of $5.58 billion. That's compared with net income of $311.9 million on revenue of $5.12 billion in the same quarter last year, the supplier said Thursday.
Adjusted net income rose to $330.2 million from $304.9 million last year. Thursday's report is only the second for the supplier under new CEO Ray Scott.
Lear surpassed analyst estimates with a record adjusted earnings per share of $4.95, up 13 percent from $4.39 per share a year ago. According to Zacks Investment Research, analysts expected $4.91 per share.
Lear acquired the Grupo Antolin business in April 2017 for 286 million euros ($333 million at current exchange rates). At the time, Grupo Antolin's seating business generated about 300 million euros ($349 million at current rates) in sales, the company said. Lear also said its results in the recent quarter were boosted by taking control of "certain affiliates."
Seating sales rose 6 percent to $4.27 billion from $4.03 billion, while Lear's E-Systems business, which focuses on connected-vehicle electronics, surged 19 percent to $1.31 billion.
Core operating margins increased 7 percent to $471 million from a year ago.
The supplier left its full-year sales forecast unchanged. Sales in 2018 are expected to be between $21.8 billion and $22 billion.
In a conference call with investors, Lear CFO John Vanneste indirectly referenced the Trump administration's tariffs on foreign steel and aluminum, saying that although the company buys 3 billion pounds of steel a year, its prices are locked in for the near future.
"Our contractual buy for steel for all of 2018 was done at the end of '17," he said. "We had a contractual price for all of '18."
The Department of Commerce didn't impose the 25 percent tariff on imports of steel and the 10 percent tariff on aluminum from the European Union, Canada and Mexico until June 1.
Vanneste said the price of steel was up about 0.2 percent for the supplier compared with 2017.
The rising cost of steel and aluminum were instead more consequential to automakers and hurt General Motors' second-quarter earnings. The results spooked Wall Street, and most auto stocks have been falling the last few days.
Lear shares fell 5.3 percent to close at $171.94 on Thursday despite earnings and revenue that topped Wall Street estimates. The price is down from its 52-week high of $206.35, hit in early June.
Lear ranks No. 8 on Automotive News' list of the top 100 global parts suppliers with worldwide sales to automakers of $20.47 billion in 2017.
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