Lear Pegs 2006 Sales at $17.7 Billion

It sees positive free cash flow.
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Lear

(LEA) - Get Report

offered full-year sales guidance Tuesday that is slightly below Wall Street forecasts.

The auto-interiors giant expects to post sales of $17.7 billion for the year ending next December, below the Thomson First Call consensus forecast of $17.8 billion. Lear pegged its pretax profit before interest and other expenses and charges at $400 million to $440 million, up from $325 million in 2005.

Like most automotive suppliers, Lear's fortunes have been hurt by the financial devastation among North American car makers

General Motors

(GM) - Get Report

and

Ford

(F) - Get Report

. Lear's sales and profit forecasts contemplate lower volume in 2006: 15.7 million units in North America and 18.8 million in Europe.

The company's shares have also deteriorated, going from nearly $59 at the start of 2005 to a closing quote Tuesday of $16.24. Last night's price is 10.6 times the Thomson First Call earnings consensus of $1.53 a share.

Lear's free cash flow will be negative in the first quarter but should swing to a positive $50 million to $100 million in the year, the company said. It had negative free cash flow of $419 million in 2005.

"This reflects improved earnings, lower capital spending, reduced tooling and engineering costs and improved net working capital, offset in part by higher cash costs for restructuring," Lear said. "Due to the seasonality of working capital, as well as restructuring costs and the launch of the GM large sport utility vehicles, free cash flow for the first quarter will be negative but is expected to improve during the balance of the year."