Lear Q4 profit leaps on new business, tax cuts

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A car seat is assembled at Lear’s plant in Hammond, Ind., factory on May 31, 2017. Photo credit: BLOOMBERG

DETROIT — Seating and electronics supplier Lear Corp. reported strong quarterly profit led by higher sales in Europe and Africa and the acquisition of Grupo Antolin’s seating business.

The U.S. supplier’s fourth-quarter profit jumped 74 percent from a year earlier to $ 401 million. Revenue grew 16 percent to $ 5.4 billion, the company reported Friday.

The supplier’s revenue from sales in Europe and Africa rose 29 percent, while revenue from North America sources rose about 9 percent.

“We completed the acquisition and integration of Grupo Antolin’s seating business, further strengthening our market share with key European customers and expanding our seat component capabilities,” the company said in a statement.

The supplier also closed on the acquisition of EXO Technologies, an Israeli GPS technology firm, strengthening its connected-vehicle systems.

During the quarter, operating earnings rose 14 percent to a record $ 441 million, Lear said.

“We are in the strongest overall competitive position in our history,” retiring Lear CEO Matt Simoncini said in a statement. “Our total return to shareholders last year was 35%. Over the last five years, we have delivered a total return to our shareholders of approximately 300%, almost three times the return of the S&P 500.”

Simoncini is scheduled to step down Feb. 28 and will be replaced by Ray Scott, executive vice president and president of Lear’s seating business unit.

Sales at Lear’s seating unit rose 14 percent to $ 4.1 billion in the fourth quarter, while revenue at the e-systems unit surged 20 percent to $ 1.25 billion. The e-systems unit represents 41 percent of the company’s $ 3.2 billion, three-year order backlog, with $ 700 million of the backlog representing joint ventures mainly in China, Lear said.

Lear said it benefited from a tax gain of $ 146 million during the quarter, led by a new U.S. corporate tax rate of 21 percent and other tax reform changes.

Profit margins at the company’s seating business dropped 0.7 percentage points to 7.5 percent, while margins at the electrical systems unit fell 1.8 percentage points to 13.2 percent.

For all of 2017, the supplier posted record net income of $ 1.3 billion, up from $ 1.17 billion in 2016. Revenue rose 10 percent to a record $ 20.5 billion.

Lear’s seating segment generated $ 15.8 billion in revenue in 2017, up from $ 14.36 billion, reflecting new business and sales growth. The electrical systems unit’s revenue rose to $ 4.59 billion from $ 4.2 billion in 2016

Lear, of Southfield, Mich., ranks No. 9 on the Automotive News list of top global suppliers, based on its $ 18.56 billion in automotive parts sales in 2016.

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