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Lear Corp. reported second quarter net profit of $ 175 million, despite $ 1 billion in revenue due to production and supply issues hurting the company more than executives expected .
The Southfield-based automotive seating and electronics supplier reported $ 4.8 billion in revenue in the quarter, up 95% from the same quarter last year, which had been marred by COVID-19 closures.
However, revenue fell significantly from Lear’s $ 5.4 billion in the first quarter, mainly due to the shutdown of production from major customers such as General Motors due to the chip shortage. electronic.
The company lowered its forecast range for the full year to $ 19.7 billion to $ 20.5 billion in net sales, from $ 20.35 billion to $ 21.15 billion it had forecast in May.
“Our customers experienced significant production disruptions, which reduced Lear’s second quarter revenue by approximately $ 1 billion,†said senior vice president and chief financial officer Jason Cardew at ‘a conference call with investors.
Lear shares rose a fraction to $ 169.69 on Friday afternoon.
CEO Ray Scott attributed the strong operational performance of the company to offset financial strains from lost sales and soaring commodity prices.
“For the second quarter in a row, we have successfully overcome supply chain shortages and customer-related production shutdowns,” Scott said on the call Friday. “As continued supply chain volatility generates near-term uncertainty, I remain confident that Lear is well positioned to benefit from the industry recovery we expect over the next several years. “
Its second-quarter free cash flow was $ 120 million, compared to a deficit of $ 611 million in the second quarter of 2020. It reported $ 3.2 billion in total cash, of which $ 1.75 billion was available in title of a revolving line of credit.
Lear said production shutdowns, supply chain issues and inflated raw material costs continue to hamper the business and industry. Some have handled the disruption better than others – seating competitor Adient plc reported a loss of $ 71 million this week.
Cardew said the company expects a hit of $ 175 million for the entire year due to rising commodity costs, the most damaging of which is steel. Prices have risen over the past seven months despite analysts predicting they are leveling off.
“The extent of the disruption worsened significantly in the final weeks of the second quarter and continued into August,†Cardew said. “We expect to see modest improvements in the production environment starting in September.”
GM announced earlier this week that it would once again halt production of certain vehicles due to the semiconductor shortage – a move it was also forced to make earlier this year. Despite the resulting short-term successes, Lear said he was making deals to ensure his long-term success.
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