Interiors specialist Lear Corporation has reported record sales and a higher net profit for the first quarter of 2006.
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Net income was $17.9m, or $0.26 per share, for the first quarter of 2006. This compares with net income of $15.6m, or $0.23 per share, for the first quarter of 2005. Results for the first quarters of 2006 and 2005 include one-time tax benefits of $8.6m and $17.8m, respectively.
For the first quarter of 2006, Lear reported net sales of $4.7 billion and pretax income of $14.8m. During the quarter, restructuring costs were offset by gains on the sales of interests in two joint ventures. These results compare with net sales of $4.3 billion and a pretax loss of $2.9m for the first quarter of 2005.
Lear said the increase in net sales primarily reflected new business globally but was offset partially by “unfavourable platform mix”, as well as the adverse impact of a weaker euro compared with a year ago.
Operating performance improved from the previous year due primarily to the increase in sales and company-wide efficiency initiatives though these improvements were offset partially by a negative operating performance by the interiors business.
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By GlobalDataDuring the quarter, Lear agreed to transfer most of its European interiors business to International Automotive Components Group a joint venture with WL Ross & Co. LLC and Franklin Mutual Advisers LLC in return for a minority equity stake in the joint venture.
It added new business, including groundbreaking for a new joint venture facility in North America to support future seating business with Nissan and several new programmes in Asia.
“While the industry environment and the performance of our interiors segment remained challenging, we were able to improve our seating segment and maintain solid performance in our electronic and electrical segment,” said Lear chairman and chief executive officer Bob Rossiter.
Lear expects record worldwide net sales in 2006 of approximately $17.7bn.
It expects 2006 income before interest, taxes, restructuring costs and various other items to be in the range of $400 to $440m, compared with $325m a year ago.
Restructuring costs for 2006 are estimated to be in the range of $120 to $150m.
Capital spending in 2006 is estimated at approximately $400m, down from last year’s peak level due primarily to lower launch activity.
Lear has based its forecasts on industry vehicle production of approximately 15.7m units in North America and 18.8m in Europe, both down slightly from 2005 and sees its top 15 platforms in North America being down more than the industry average.
It is assuming an exchange rate of $1.20/euro, slightly weaker than a year ago.
