Lear Corp. took a $27 million net income loss on declined sales in the third quarter as supply chain issues and slowed auto production continue to hurt the Southfield-based seating supplier.
Lear’s sales decreased 13 percent year-over-year to $4.3 billion, the company said in its earnings report Tuesday. Adjusted net income was $32 million, compared with adjusted net income of $225 million and net income of $174 million in the same period last year.
The company lowered its full-year outlook to a sales range of $18.8 billion-$19.2 billion, compared with $19.7 billion-$20.5 billion projected in August. It had revenue of $17.05 billion in 2020 and $19.81 billion in 2019. It reported net income of $175 million last quarter.
Despite the financial hits, Lear reported sales growth over market of 9 percentage points. President and CEO Ray Scott assured investors the company is well-positioned to recover.
“We’re moving in the right direction,” Scott said on a call with investors. “We have the right strategy. We have the right plan. Short-term issues will be behind us at some point, and we’ve positioned this company for long-term success.”
Lear (NYSE: LEA) was trading at $174.69 as of late morning Tuesday, a marginal decrease from where it opened the day.
The global microchip shortage continues to be a primary source of the automotive industry’s struggles. Global car production decreased 19 percent from last year to 16.2 million units. Production in North America dropped 25 percent to 3 million units.
Commodity price increases, labor shortages and limited visibility on production schedules are also negatively impacting Lear. Scott said those challenges are expected to continue into next year, but at the same time, strong demand, low dealer inventory and a strong backlog are reasons to remain positive.
The company also pointed to its recent acquisitions —including Kongsberg Automotive’s interior comfort division, and a recent joint venture with Shinry Technologies Co. Ltd. to expand electric vehicle capabilities —as plays for long-term growth and stability.
“Our industry continues to be significantly impacted by COVID-19 and global semiconductor shortages,” Scott said in a news release. “During these challenging times, we remain focused on supporting our customers and positioning our company to capitalize on opportunities when the industry recovers.”