The seating and electronics supplier lowered its full-year revenue outlook by more than $1 bn, to between $19.8 bn and $20.3 bn. Earlier, it had projected revenue at between $20.9 bn to $21.7 bn. Year-end net income is now projected to be $885 m to $965 m. Earlier this was projected to be between $1.1 bn to $1.2 bn.
GM is Lear's largest customer, accounting for 18% of the supplier's business in 2018. Ford follows with 16%, according to Lear's annual 10-K report filed with the SEC.
The downgrades follow lower production by key customers which is offset partly by new business, the company said in a press release. Core operating earnings will fall to 7% of sales, compared with 8.3% of sales in 2018, the company said.
Lear, is the first major supplier to signal its second-quarter performance. The preliminary results came ahead of its official report later this month. The company expects second-quarter revenue of about $5 bn, down 10% from the same quarter in 2018. The company also said it expects second-quarter free cash flow of about $265 m, and share repurchases to total about $160 m.
'Previously, we anticipated an increase in industry production volumes in the second half of the year and an associated improvement in sales and earnings,' CEO Ray Scott said in a statement on 16 July. 'Macroeconomic and industry factors will continue to put pressure on sales and earnings throughout 2019,' he added.
Scott said the company will increase its restructuring costs by $60 m to $200 m to reduce capacity and improve efficiency.
Lear is No. 8 on Automotive News' list of the top 100 global parts suppliers. Worldwide sales to automakers were $21.1 bn in 2018.
This story first appeared in Crain's Detroit Business, by Dustin Walsh.