Cutbacks and Automation Hit Lear’s Profits
Automotive seating and wiring supplier Lear Corp. reported a 9% drop in adjusted net income for the second quarter, totaling US$188 million, due to extraordinary expenses incurred to automate its plants and reduce its workforce globally.
The company reported revenue of US$6 billion, which remained virtually unchanged compared to the same period in 2024, its executives revealed at the earnings conference.
Lear revealed that while its gross direct exposure to tariffs is approximately US$210 million for 2025, contractual agreements with its customers have allowed it to recover virtually all of the US$63 million in tariff costs it incurred in the first half of the year.
The company said that more than 90% of its direct imports from Mexico and Canada meet USMCA requirements and therefore remain exempt.
"In seating, we won a key program in Asia with BMW and in North America for seating components for the new Ford F-150 and F-250 trucks. Our modularity strategy continues to drive new business,“ said Raymond E. Scott, president and CEO of Lear.
”During the quarter, we won two contracts to supply ComfortFlex seats and one for ComfortMax, including a key program with a luxury electric vehicle manufacturer that combines heating, ventilation, pneumatic lumbar support and massage in the surface materials," Scott added.
The executive noted that Lear currently has a total of 24 contracts for ComfortFlex, FlexAir and ComfortMax seating applications, which will generate more than US$150 million in average annual revenue.
“In China, we won several awards with Chinese automakers such as FAW, Leapmotor and XPeng,” he said.
New business was also secured in Electrical Systems, including a key contract “with a major global electric vehicle manufacturer” whose program begins later this year, “demonstrating our ability to launch new businesses quickly,” the executive celebrated.
The E-Systems division's contracts for the year are already approaching US$1 billion in annual sales, and several additional opportunities are expected in the second half of this year.
As for the first half of the year, 4,400 jobs were cut, reducing the salaried workforce by almost 20,000 people, or 11%, since Lear began its aggressive automation plan in late 2023.
The savings generated by this restructuring totaled US$60 million in the first half of the year, and an additional US$90 million is expected in the second half.
These savings will be compounded by a US$35 million reduction in capital expenditures resulting from an anticipated decline in vehicle production in North America due to tariffs. However, the costs associated with “rationalizing the size of operations” are estimated to be US$40 million more than estimated at the beginning of the year.
