Global Slowdown To Hurt Lear Corporation’s Top Line
Lear Corporation (NYSE: LEA), whose stock currently trades at around $127, generates its revenue primarily from its seating segment which is projected to account for 74.9% of total revenues in 2019, While the E-Systems solutions is expected to contribute 25.1% to the top line. In this note we discuss the revenue segments of Lear, their historical performance, and expected Total Revenue for 2019. You can look at our interactive dashboard analysis ~ Lear Corporation Revenues – How Does Lear Make Money? ~ for more details. In addition, here is more Consumer Discretionary data.
Lear Corporation Business Model:
What Does Lear offer?:
- Lear Corporation is a leading Tier 1 supplier to the global automotive industry. They supply seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to all of the world’s major automotive manufacturers.
- As of December, 2018 they had 261 manufacturing, engineering, and administrative locations in 39 countries and are continuing to grow the business in all automotive producing regions of the world, both organically and through complementary acquisitions. Its manufacturing footprint reflects more than 145 facilities in 22 low cost countries.
- Seating — The Seating segment consists of the design, development, engineering, just-in-time assembly and delivery of complete seat systems, as well as the design, development, engineering and manufacture of all major seat components, including seat covers and surface materials such as leather and fabric, seat structures and mechanisms, seat foam, and headrests.
- E-Systems — The E-Systems segment consists of the design, development, engineering and manufacture of complete electrical distribution systems, as well as sophisticated electronic control modules, electrification products, and connectivity products.
What Are The Alternatives?
- Major competitors are companies like Adient, Magna Faurecia, BorgWarner, LKQ, and Gestamp.
What Is The Basis of Competition?
- Lear and most its competitors are seeking to expand market share with new and existing customers, including in Asia and other potential high growth regions. The customers award business based on, among other things, price, quality, service, and technology.
- Lear’s total revenues grew from $18.6 billion in 2016 to $21.2 billion in 2018. This represents an increase of 1.14x.
- We forecast the revenues to be around $20.9 billion in 2019, reflecting a fall of 1.4% y-o-y due to the global auto market slowdown.
Revenue Growth to be expected from the E-Systems segment as the Seating segment is expected to take a hit due to Global Auto slowdown
- Seating segment revenue has contributed the highest to Lear and has increased at a steady pace from $14.4 billion in 2016 to $16 billion in 2018. Trefis estimates a fall in the same to $15.6 billion in 2019.
- E-system revenue has increased at a steady pace from $4.2 billion in 2016 to $5.1 billion in 2018. Trefis estimates a fall in the same to $5.2 billion in 2019.
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