Justice Sirikah

‘Green Shoots’ in Sight for Lear Corporation (PinkSheets: LEARQ) upon Exit from Bankruptcy Protection

by Justice Sirikah November 12, 2009
learq_logo.jpg“We’re on a good path now”, exclaimed Robert Rossiter, the chief executive of Lear Corporation (PinkSheets: LEARQ) referring to the notion that a four month sojourn in bankruptcy protection had opened up a financial leeway to the tier 1 supplier of automotive seat and electrical systems. This was at a conference call on Wednesday when the company presented a third quarter net income, upturning a net loss that is on record for the same period of a year ago.

  For all the positive vibes, Lear which emerged from bankruptcy on Monday having cut its debt obligations by about $2.8 billion as from July 7 is anticipating 2009 total sales of $9.5 billion, compared to total sales of $13.57 billion posted last year. The company also predicted that full year free cash flow will come in subdued at $275 million, despite an encouraging free cash flow of $133.3 million.  

  According to the Southfield-headquartered supplier, net profit attributable to the most recent financial quarter reached a mark of $24.6 million, a stark disparity from a net loss of $98.2 million in the year earlier corresponding period. But even then, Lear’s quarterly revenues swung 19 percent down to $2.5 billion, from $3.1 billion booked for the July – September time interval last year.

Even in the face of the auto sales downward spiral, the major supplier to General Motors Company (PinkSheets: MTLQQ) and Ford Motor Co. (NYSE: F) declared that the increase of sales backlog to $1.4 billion that it has landed for 2010 to 2012 is a highlight in its history. 60 percent of the new business is expected from the company’s electrical systems and 40 percent from its seating division, while $650 million of the overall value of the backlog is expected from North America, $600 million from Asia and $150 million from Europe where car production has dropped by almost a third for the recent six months to June.

  Since 2005, Lear has embarked on cutting back its operational costs through shedding facilities and workforce as well as taking its business to the cheap labour realms of the world. Approximately $760 million has been committed to restructuring by the company as from the beginning of 2008 to date.

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