Lear Corp. - Company Strategy & Performance Analysis
Lear Corporation (Lear Corp) is a leading supplier of full-line automotive seat systems, electrical distribution systems, and electronic products. The company designs, develops, engineers, manufactures and distributes seat covers and surface materials such as leather and fabric, seat structures and mechanisms, seat foam, headrests, terminals and connectors, junction boxes, high-power components for hybrid and electric vehicles, and electronic control modules. The company has operations in the US, Mexico, China, Germany, Singapore, Vietnam, the Philippines, and Thailand. Lear Corp is headquartered in Southfield, Michigan, the US.
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Acquisition of Grupo Antolin's seating business led to an increase in the segmental revenue
Lear Corp‘s seating segment is engaged in the design, development, engineering, just-in-time assembly and delivery of complete seat systems. It is also engaged in the design, development, engineering and manufacturing of major seat components, including seat covers and surface materials such as leather and fabric, seat foam, seat structures and mechanisms, and headrests. The company develops systems and components for all vehicle segments from compact cars to full-size sport utility vehicles. The segment’s revenue increased by 11%, from US$14.4bn in 2016 to US$15.9bn in 2017 due in part to new business generated in North America, Europe and Asia, as well as the acquisition of Antolin Seating.
The company recorded an increase in revenue
The company’s E-Systems business segment designs, manufactures, assembles and supplies electrical power management systems and components for vehicles. Its electrical distribution systems and electronic products include wire harnesses, junction boxes, terminals and connectors, various electronic control modules, wireless systems and high voltage components, as well as audio sound systems and in-vehicle television. E-Systems segment reported an increase in revenue from US$4.2bn in FY2016 to US$4.6bn in FY2017, an increase of 9.0%. Obtaining control of an affiliate and higher production volumes on key Lear platforms in Europe and Asia has supported this growth.
Lear Corp witnessed an improvement in revenue, operating income, and net income between Q4 FY2016 and Q4 FY2017
The company’s revenue rose from US$4,643.5m in Q4 2016 to US$5,363.8m in Q4 2017 due to the strong performance of both its seating and e-systems segments. Its net income increased from US$229.9m in Q4 2016 to US$400.5m in Q4 2017. Operating income increased from US$328.6m in Q4 2016 to US$389.1m in Q4 2017. This was mainly due to the company’s strategic business expansions across North America, Europe and Asia. Lear Corp’s operating margins increased from 7.1% in Q4 2016 to 7.3% in Q4 2017, due to its strong focus on reducing costs through various cost reduction strategies.