Lear Corporation Business Report FY ended Dec. 2016
|(in million USD)|
|FY ended Dec. 31, 2016||FY ended Dec. 31, 2015||Rate of change (%)||Factors|
|Net Sales by segment|
1) Net Sales
-The Company's sales for the fiscal year ended December 31, 2016 increased by 1.9% over the previous year to USD 18,557.6 million. New business in Asia, Europe and South America and higher production volumes on key Lear platforms in Europe and Asia positively impacted net sales by USD 845 million and USD 139 million, respectively. These increases were partially offset by net foreign exchange rate fluctuations related to the strengthening of the U.S. dollar against most major currencies and selling price reductions, which reduced net sales by USD 602 million.
-The Company's seating segment had sales of USD 14,356.7 million for the fiscal year ended December 31, 2016, an increase of 1.8% over the previous year. New business positively impacted net sales by USD 656 million. This increase was partially offset by net foreign exchange rate fluctuations and selling price reductions, which negatively impacted net sales by USD 427 million.
-The Company's E-systems segment's sales for the fiscal year ended December 31, 2016 were USD 4,200.9 million, an increase of 2.1% over the previous year. New business and higher production volumes on key Lear platforms positively impacted net sales by USD 179 million and USD 71 million, respectively. These increases were partially offset by selling price reductions and net foreign exchange rate fluctuations, which negatively impacted net sales by USD 175 million.
-In August 2016, the Company announced that it is renaming its Electrical business segment as the "E-Systems" business segment. This name change is intended to reflect the increasing complexity of automotive electrical systems and the company's expanded electrical architecture and vehicle connectivity capabilities. The E-Systems portfolio consists of wire harnesses, terminals & connectors, complex electronic modules, power converters and inverters, battery chargers, 48-volt systems, wireless capabilities, software, cybersecurity, lighting modules and audio components. (From a press release on August 9, 2016)
-In February 2017, the Company announced that it has signed a definitive agreement to acquire Grupo Antolin's automotive seating business. The transaction is valued at EUR 286 million on a cash and debt free basis. The closing of the transaction is expected to occur in the first half of 2017. Grupo Antolin's seating business is headquartered in France with sales and operations in 5 European countries. The business is comprised of just-in-time seat assembly, seat structures & mechanisms and seat trim. The seating business has annual sales of approximately EUR 300 million and includes 12 manufacturing facilities, 2 technological centers and 2,273 full-time and contract employees. Its current customers include PSA, Daimler, Renault Nissan and Volkswagen. (From a press release on February 6, 2017)
-In December 2016, the Company acquired AccuMED Holdings Corp. a privately-held developer and manufacturer of specialty fabrics. AccuMED provides innovative fabric processing technology that will benefit Lear's automotive fabric operations, and it adds critical mass to its existing non-automotive fabric products.
Recent Development Outside U.S.
-In April 2016, the Company announced that it has opened its new leather cutting plant in Szolnok, Hungary. The new plant was completed in December 2015 and is located in the Szolnok industrial park opposite an existing leather production facility which was built in 2004. With an area of 16,000 square meters, the new facility doubles the production space available. As part of the Eagle Ottawa division of Lear, it supplies leather parts to many premium automotive manufacturers in Europe. Both plants combined employ over 2,000 people. (From a press release on April 21, 2016)
-In August 2016, the Company announced that it had recently signed an investment agreement with the Administrative Commission of Yangzhou Economic & Technological Development Zone to construct a state-of-the-art premium leather processing plant in Yangzhou, China. The new plant, comprised of a 32,000-square-meter facility on 56,700 square meters of land, will support Lear's rapid sales growth and new business development in China. The plant will have approximately 300 employees in 2018 and expand to approximately 700 employees when running at its designed capacity. 28,000 square meters of adjacent land reserved for future expansion. Having 81 locations across Asia including 47 in China, Lear's sales in China over the last three years have grown at an average annual rate of 17%. Lear's products are designed, engineered and manufactured by a diverse team of approximately 140,000 employees located in 36 countries. (From a press release on August 23, 2016)
-In June 2016, the Company signed an agreement to construct a modern new and expanded Asia-Pacific regional headquarters and technology complex in the Yangpu District of Shanghai, China. Plans for the new building include expansion of the company's administrative infrastructure, a new product and technology center, industry-leading product development capabilities with state-of the-art engineering and testing equipment and a new Lear innovation studio for Asia. This new multi-story center will include approximately 28,000 square meters and support Lear's continued rapid sales growth and development of new business in China and throughout Asia. (From a press release on June 7, 2016)
Recent Development in U.S.
-Matt Simoncini, CEO of Lear Corp, said that the Company is trying to find the right "economic equation" to bring up to 5,000 jobs to Detroit from Mexico. "We've been in conversations with organized labor and our customers," he said. In early August, Conrad Mallett, a Lear director, said there were "meaningful" conversations for a "pilot program" that could result in moving 1,500-5,000 jobs to Detroit. Lear now employs approximately 1,000 people in Detroit through Integrated Manufacturing and Assembly (IAM), a joint venture that manufactures and assembles automobile seats. Lear currently employs approximately 45,000 in Mexico. (from a Detroit News article on October 18, 2016)
-The Company plans to expand its factory in Vance, Alabama, creating more than 500 new manufacturing jobs during the next few years. The Company now makes seats for Mercedes-Benz's C-Class sedans. It will make seats for Mercedes' GLE and GLS sport utility vehicles when the additional plant comes online in 2019. Mike Thomas, Lear's plant manager, said the plant will add an estimated 535 employees when the SUV seating production begins. The plant currently has approximately 140 employees. (Economic Development Partnership of Alabama release from July 28, 2016)
-The Company was recognized by Ford Motor Company as Supplier Diversity Development Corporation of the Year for 2015. (From a press release on May 23, 2016)
-Volkswagen has nominated a total of 55 strategic partners for 61 fields of competence under its "Volkswagen Future Automotive Supply Tracks" (FAST) initiative. Lear Corporation has been selected in the field of complete seating assemblies. (From a press release on May 23, 2016)
-In September 2016, the Company announced that it has entered into a strategic partnership with Tempronics, pursuant to which Lear obtained a minority equity interest in Tempronics and also secured exclusive rights to its thermoelectric seat heating and cooling technology for automotive applications. Tempronics is a venture capital-backed technology company based in Tucson, Arizona. Tempronics was incorporated in 2006, and develops solid-state thermoelectric devices that heat, cool and generate electricity. (From a press release on September 8, 2016)
-The Company is building capabilities organically through internal investment and through acquisition and partnership. Recent transactions added technology that directly connects on-board vehicle systems with cloud-based applications using proprietary, secure data exchange capabilities via cellular networks and V2X hardware and software solutions utilizing expertise in 5.9 GHz DSRC and other wireless communications protocols, notably GPS satellite communications.
-The Company has developed active sensing and comfort seat capabilities, utilizing electronically controlled sensor and adjustment systems and internally developed algorithms. These seat designs automatically and constantly adjust the seat's cushioning and support based on the occupant's position and ideal alignment for health and wellness. The Company also has developed technologies that will monitor certain bio-metric readings through seat sensors with a high level of accuracy and reliability.
-Intelligent and dynamic seating solution called "INTU Seating" will provide future benefits as consumers and automotive manufacturers demand seats that can sense key attributes of a driver and passenger and communicate these attributes within the vehicle network, as well as to external networks. The seats will intuitively anticipate and dynamically adjust to the occupant's needs and preferences related to posture, health and wellness, comfort and safety.
-"ProActive Posture" seating uses proprietary "MySeat by Lear" technology powered by "TheraMetric" analytical process. This process provides a driver with a seating position that promotes better posture and cumulative wellness benefits. "Lear Crafted Comfort Connect" and "Advanced Comfort Systems" are adjustable cushions, seat backs and side bolsters which support correct posture and provide improved comfort and appearance.
-The Company began production of "Solid State Smart Junction Box", which was awarded Automotive News PACE Award winning in 2016. The Company continues to refine its smart junction box technology, including the development of aluminum printed circuit boards.
-In lighting, the Company has developed advanced technology electronic controls, including a Matrix LED Control System capable of individually dimming and switching on/off up to 100 LEDs.
-The Company has developed an 11kW wireless charging system that enables electric vehicles to safely recharge at the highest power level available without plugging in the vehicle.
-The Company has developed a firewall module, including proprietary software, which protects the vehicle from cybersecurity intrusion through one of its most vulnerable points, the on-board diagnostic port. The Company also has enhanced V2X product line by adding secure, over-the-air software update capabilities.
-In October 2016, the Company has opened an Innovation Center in Detroit, Michigan, USA. At this 35,000-square-feet center, the Company plans to develop new automotive products and technologies, incubate non-automotive business opportunities, collaborate with the College for Creative Studies (CCS) on the next generation of automotive seating and vehicle interiors and work with the Wayne State University (WSU) School of Engineering to develop applications for connected cars and alternative energy vehicles. (From a press release on October 18, 2016)
-Advanced technology development is conducted worldwide at six advanced technology centers and at the Company's product engineering centers. The global innovation and technology center in Southfield, Michigan, U.S., is the Company's central facility for research and development.
-Over 2,200 engineers across 14 countries
-5 global technology centers in Belgium, China, Germany, Spain and the U.S.
-The Company's global center for Advanced Efficiency Systems group (high power and hybrid electric systems and components) is in Southfield, Michigan with full development capabilities also located in Valls, Spain.
-The Company's engineering and development activities for electronics are in Southfield, Michigan, Santa Rosa, California, Spain, Germany, Belgium, China and India.
-The Company employs approximately 600 software engineers globally and are pursuing expansion of specialized capabilities in vehicle networking, encryption, cybersecurity and connectivity protocols. The Company has expanded its software development capabilities through acquisition, internal investment and strategic hires, building on its architecture and power management capabilities with expertise in wireless communication software and cybersecurity.
-As of December 31, 2016, the Company has approximately 2,100 patents and patent applications pending.
-The Company has 619 patents issued or applied for in the advanced efficiency systems product technology area.
|(in million USD)|
|FY ended Dec. 31, 2016||FY ended Dec. 31, 2015||FY ended Dec. 31, 2014|
|(in million USD)|
|FY ended Dec. 31, 2016||FY ended Dec. 31, 2015||FY ended Dec. 31, 2014|
-The Company expects to invest USD 550 million in capital expenditures for the fiscal year ending December 31, 2017.
-For the fiscal year ending December 31, 2017, the Company forecasts its net sales to be USD 19.5 billion. The adjusted net income attributable to the Company is projected to be USD 1.1 billion.