Lear posts $294M net loss in Q2

DETROIT — Lear Corp.'s second-quarter net income swung to a loss of about $294 million compared with a gain of about $183 million the year before as industrywide production shutdowns slashed sales and profits.

The producer of automotive seating and electronics is one of several auto suppliers — including BorgWarner and Tenneco — scheduled to release second-quarter earnings this week. Numerous auto suppliers already have reported a plunge in second-quarter results.

Lear said revenue for the quarter slipped 51 percent to $2.4 billion because of production declines.

Lear shares rose 0.3 percent to close at $112.04 after Tuesday trading on Wall Street.

During the second quarter, global vehicle production fell 46 percent, with China up 7 percent, North America down 69 percent and Europe down 63 percent, Lear said. Global production weighted by Lear's sales declined by 55 percent.

Lear said in a Tuesday call with analysts that it expects global production to decrease 10 to 15 percent in the second half of the year, based on the uncertainty surrounding the pandemic and possible government-mandated shutdowns.

The company reported $1.8 billion of cash and cash equivalents and $2.5 billion of total liquidity. Lear is "aggressively managing costs ... and we are confident in our liquidity position," the company said.

"The second quarter of 2020 was one of the most challenging in our history," CEO Ray Scott said in a statement. "Our business was negatively impacted by unprecedented production shutdowns in our major markets in April and May. As restrictions and closures eased, we concentrated our efforts on safely and efficiently restarting operations, managing costs, and positioning the company to take advantage of growth opportunities."

Scott previously said second-quarter results would be more affected by production declines than first-quarter results. Lear's plants outside China were closed during April and part of May before production started up again gradually. Most plants in major markets were "operating at pre-COVID levels" by the end of the second quarter, the company said. The company added that "significant inefficiencies and incremental costs" stemming from the pandemic decreased in late June.

The supplier said during a call that Lear had been awarded two advanced technology production contracts and has "ten engineering development programs underway with seven different global OEMs." The company's platform is slated to launch in 2021 and 2023 with "two global automakers," Lear said. The company also said that it won $200 million in net conquest awards in the second quarter.

Lear also reported in the second quarter that it produced over 10 million face masks for employees, front-line workers and local communities.

The supplier said it will not provide financial guidance because of the uncertainty surrounding the pandemic.

Lear, of Southfield, Mich., ranks No. 9 on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers of $19.81 billion in 2019.