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Lear Corporation Ends 2016 With Record Sales And Solid Operational Performance

Lear Corporation ( LEA ) announced record results for 2016 on January 26, reporting $18.56 billion in revenue in the twelve months, up almost 2% year-over-year. Why the performance of the leading global automotive seating and electrical systems supplier remained impressive throughout the year was because of growing content per vehicle (high growth in content-rich segments such as premium vehicles and SUVs) and a strategically diversified portfolio, allowing Lear to outpace the growth in global vehicle production.

Lear Q&A 26

Despite being slightly hurt by negative effects of currency translations on account of a stronger U.S. dollar, the strong core performance at both the seating and electrical systems divisions has boosted Lear's 2016 performance. The company's business is well-balanced in terms of product segment, customer and platform mix, and by geography. North America formed 40.5% of the company's top line, Europe and Africa formed 38%, South America formed 2.9%, and Asia formed 18.6%. Of the 18.6% of the sales contributed by Asia, approximately three-fourths are from China. Although China presents a huge growth opportunity for Lear, especially since automotive growth is expected to slow down in developed markets this year after re-fueling of the fleet took place aggressively in the years following the recession, vehicle production in the country is also expected to grow only 3% this year. Slow growth in China could be a possible threat to Lear's growth in the near future. Lear is well-placed in the country with strong relationships with both the domestic and foreign automakers. This means that if one automaker-client is witnessing lower demand, Lear can offset that with more business from another client.

Lear's stock has appreciated as much as 42% in the last 52 weeks, and this has been on the back of the solid core performance, which we expect this performance could continue into this year. For 2017, Lear expects to increase its revenue from $18.56 billion in 2016 to $19.5 billion, on the back of a $1.3 billion sales backlog and $0.5 billion impact of positive mix. This represents a 5% top line growth for Lear, after a rather slower 2% top line growth rate in 2016.

Have more questions on Lear Corporation? See the links below.

  • Is The Lear Corporation Stock Undervalued?
  • How Lear's Seating Division Is Geared For Growth Through The End Of The Decade
  • Why Lear Has Been Growing By More Than The Global Vehicle Production Growth
  • Downside To Lear's Valuation If Global Automotive Growth Slows Down
  • How China Is A Major Boost For Lear Corporation Right Now
  • Lear Raises Guidance On Solid Operational Performance
  • What Will Be The Jump In Lear's Valuation If Electrical Margin Jumps By More Than Expected?
  • What Will Be The Jump In Lear's Valuation If Seating Margin Expands By More Than Expected?
  • Growing Content In China Could Add To Lear's Growth This Year
  • Lear Earnings Review: Profit Rises On Solid Performance Across Seating And Electrical Segments
  • What's Lear Corporation's Fundamental Value Based On Expected 2015 Results?
  • Where Will Lear's Revenue And EBITDA Growth Come From Over The Next Three Years?
  • What Is Lear Corporation's Revenue And EBITDA Breakdown?
  • By What Percentage Have Lear's Revenues And EBITDA Grown Over The Last Five Years?
  • How Has Lear Corporation's Revenue And EBITDA Composition Changed Over 2011-2015?
  • What Is Lear Corporation's Geographical And Client-Wise Revenue Breakdown?
  • Why Lear's Stock Has Appreciated 90% In The Last Five Years

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Lear Corporation

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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