Lear 3Q Profit, Sales Rise Despite Lower Auto Output

What happened

Lear reported third-quarter profit of $136.6 million, or $2.74 a share, up from $108.2 million, or $2.02 a share, a year earlier. Net sales rose 1.6% to $5.77 billion, even though global vehicle production fell 2%.

Confirmed

Global impact / market context

Higher profit and sales while vehicle production falls means Lear won more business per vehicle, which supports revenue even when automakers build fewer cars. That helps explain why the company still expects to hit its full-year earnings guidance.

Analyst inference

Analysts expected adjusted earnings of $3.32 a share, and Lear delivered $3.71. Sales slightly missed Wall Street models for $5.81 billion. The beat on profit amid falling production suggests new business wins are offsetting weaker industry output.

Analyst inference

What to watch

1. Lear continues to expect adjusted earnings before interest, taxes, depreciation and amortization of $1.7 billion to $1.82 billion, and net sales of $23.35 billion to $23.75 billion. Confirmed
2. Investors should watch whether new business awards, such as the programs with an undisclosed North American automaker and Mahindra & Mahindra, convert into higher future sales. Proposed
3. Watch global vehicle production trends: if output keeps falling, Lear's ability to keep winning new business becomes more important for protecting revenue and profit. Analyst inference

Evidence

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