DETROIT — Lear Corp. managed to churn a profit in the first quarter of 2020 despite a significant impact on production from the global COVID-19 outbreak.
The seating and electronics supplier said net income fell 67 percent to $76.4 million during the quarter while revenue fell 14 percent to $4.5 billion. COVID-19 sliced $900 million of sales in the quarter, the company said in a press release.
Lear’s China plants were closed for several weeks in the quarter due to the outbreak that started in Wuhan, China. But while its China operations were reopened by the end of the quarter, “virtually all plants” in North America, Asia (outside of China), South America and Europe were closed.
“Our first quarter financial results were significantly impacted by production disruptions stemming from the COVID-19 pandemic.,” Lear CEO Ray Scott said in the press release. “Excluding the impact of COVID-19, Lear’s results reflect solid financial performance in both of our business segments. While significant near-term challenges remain, I am confident in the strength of our underlying business, long-term competitive position and liquidity.”
Scott, however, warned that financial results in the company’s second quarter would see a greater impact from COVID-19 due to decreased production.
During the first quarter, global vehicle production was down 23 percent from 2019, with China down 47 percent, Europe down 19 percent and North America down 10 percent, the company said.
To manage the economic fallout, Lear drew down $1 billion of its total available $1.75 billion in credit, suspended its share repurchasing program and issued $650 million in new bonds. Lear also deferred non-plant employee salaries by 20 percent, reduced Scott’s salary by 10 percent and other named executive officers’ salaries by 5 percent.
Lear’s adjusted earnings of $2.05 per share beat Wall Street estimates, $1.08 per share, by a considerable margin. Company shares gained 7 percent in midday trading to $99.24. Before Friday, the shares were down 30 percent year-to-date.