Weakening North American auto production led
to revise its first-quarter earnings guidance sharply lower Tuesday. The stock was crushed.
The Southfield, Mich., car interior builder now expects to break even in the quarter. It had previously forecast earnings of 50 cents to 70 cents a share, and analysts surveyed by Thomson First Call had been forecasting earnings of 64 cents a share on sales of $4.47 billion.
Earlier Tuesday, both
reported big sales declines for February.
Lear said its old guidance was based on expectations that North American vehicle production would fall about 5% in the first quarter compared with a year ago. Production schedules have deteriorated further, particularly in areas where Lear specializes, the company said. Lear is also seeing higher costs from suppliers.
"While we expect 2005 to be challenging on several fronts, we do expect the industry production environment to improve later in the year following this near-term inventory correction," the company said. "With our strong sales backlog and a companywide emphasis on improving our cost structure, our longer-term outlook remains positive."
The stock was hammered after hours, losing $7.65, or 14.5%, to $45.11, a new 52-week low.