LEAR 2005 sholders meet

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LEAR 2005 sholders meet

  1. 1. 2005 Annual Meeting of Shareholders R
  2. 2. Agenda “This is Lear” Video Strategic and Financial Review Dave Wajsgras, SVP & CFO Americas Operating Review Doug DelGrosso, President & COO – Americas International Operating Review Don Stebbins, President & COO – International 2
  3. 3. Strategic and Financial Review 3
  4. 4. Strategic Evolution Going Forward Profitably Grow the Business Operational Excellence; 1999-2003 Reduce Debt Seat Systems to 1994-1999 Total Interior Capability Seat Components 1990-1994 to Seat Systems 4
  5. 5. Lear’s Strategy has Supported Rapid Growth Net Sales (in billions) $17.0 $18.0 me Inco Net $16.0 2% GR 2 CA SALES $14.0 CAGR $12.0 18% $10.0 $8.0 $6.0 $3.1 $4.0 $2.0 $0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Steadily increased net sales over the last ten years to $17 billion in 2004 Transformed from a seat assembly operation to one of the world’s largest automotive interior systems suppliers Ranked #127 in the Fortune 500 5
  6. 6. At the Same Time, We have Diversified Our Product Mix 2004 1994 Seats and Seating Seating Components 67% 100% Interior Electronic / Electrical 17% 16% 6
  7. 7. And Our Geographic Mix 1994 2004 Europe Europe 17% 39% Rest of World North America North America 6% 83% 55% 7
  8. 8. And Diversified Our Customer Mix 1994 2004 Extended Ford & GM- Saab, Volvo, Classic Ford & GM* Jaguar and Land Rover 46% 10% Classic Ford & GM* 75% DaimlerChrysler BMW PSA All Other Fiat VW 25% All Other Mazda Other Asian Renault-Nissan * Includes Opel 8
  9. 9. Financial Highlights Last Few Years Solid revenue growth was driven by strong sales backlog Increased net income per share Global cost efficiency actions implemented Debt was reduced, overall financial position strong 2005* Three key factors impacting near-term results -- adverse platform mix, lower industry volume and high raw material and energy prices Financial outlook improving the balance of this year and into 2006 * Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 9
  10. 10. Platform Mix has Adverse Impact in 2005 First Quarter Production: 2005 Compared With 2004 Europe Production North America Production 2% (3%) (4%) (9%) (11%) (11%) Big Overall Overall Lear’s Top 15 Big Lear’s Top 15 Three Industry Industry Platforms Three Platforms Trucks 10
  11. 11. Mitigation Actions to Help Offset Commodity Movements Key Commodities Action Plan • Factor into customer productivity negotiations Steel • Lear’s Cost Technology Optimization process • Supply base compression Resins • Re-sourcing – develop new sources of supply • In-sourcing – fill open capacity where Chemicals appropriate • Low-cost country sourcing and engineering Energy • Supplier Lean Manufacturing and Six Sigma Continuing To Work With Customers And Supply Base 11
  12. 12. Long-Term Outlook Remains Positive for Lear* Near-term financial results severely depressed reflecting transitional volume and cost factors; expected to improve in second half of 2005 and going forward Strong three-year sales backlog of $3.8 billion is up 25% from last year’s three-year backlog Platform mix to improve in 2006 with full-year benefit of major 2005 launches and introduction of GMT900 Strong and flexible overall financial position * Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 12
  13. 13. Americas Operating Review 13
  14. 14. Americas U.S. and Canada 28,000 Employees 85 Locations 14
  15. 15. Americas Mexico and Honduras 34,000 Employees 36 Locations 15
  16. 16. Lear’s Importance in Mexico Maquiladora Company #1 Petroleos Mexicanos Delphi #2 Wal Mart de Mexico Lear #3 FEMSA General Electric #4 Comision Federal de Electricidad #5 Grupo Carso Yazaki North America Alcoa Fujikura Ltd. #16 Lear Lear Ranks # 16 Among Lear Ranks # 2 Among All Companies In Mexico Maquiladoras In Mexico 16
  17. 17. Manufacturing Footprint Juarez • 5 Trim facilities • 4 Wire facilities • 2 JV’s (wire) Chihuahua • 5 Wire facilities Monterrey • 1 Interior Facility Hermosillo • 1 Seat Facility Ramos/Saltillo • 1 Trim facility Puebla • 1 seat facility • 1 Seat facility • 2 Interior facilities Silao • 1 Seat Facility Honduras • 2 Wire facilities • 1 JV (wire) Toluca • 2 Interior facilities Tlahuac • 1 Interior facility Regional Concentration in Juarez, Chihuahua & Monterrey 17
  18. 18. Americas South America 2,000 Employees 3 Countries / 9 Locations 18
  19. 19. North America Challenges Strengths Industry production Customer focus volume Solid fundamentals Platform mix Dedicated team High raw material costs Leadership position in Ever increasing customer total interiors requirements 19
  20. 20. Major North American Launches Buick Lucerne Cadillac DTS Total Interior Integrator, Total Interior Integrator, Electrical Distribution Electrical Distribution SOP: 4Q 2005 SOP: 3Q 2005 Chevy Impala / Chevy Monte Carlo Hyundai Sonata Seats Seats, Wire Harness SOP: 2Q / 3Q 2005 SOP: 1Q 2005 20 Note: Products in red are produced in Mexico/Honduras.
  21. 21. Major North American Launches Chevy HHR Ford Fusion / Milan / Zephyr Cockpit, Flooring & Acoustics Seats SOP: 2Q 2005 SOP: 3Q 2005 Ford Explorer / Mountaineer Dodge Ram Truck Seats, Doors, Electrical Distribution Seats, Doors, Instrument Panel, SOP: 3Q 2005 Overhead Systems SOP: 3Q 2005 21 Note: Products in red are produced in Mexico/Honduras.
  22. 22. Americas – 2005 Strategy Improve quality and customer service Reduce costs – get leaner Support flawless launches Identify new growth opportunities Serve as a catalyst for our customer’s success 22
  23. 23. International Operating Review 23
  24. 24. Europe / Africa 20 Countries 37,000 Employees 103 Locations 24
  25. 25. Overall in Europe, We have Grown Sales and Steadily Improved Margins Europe CPV European Financials Growing sales and $351 improving margins $310 Positive cash flow $247 Expanding our low-cost manufacturing and sourcing in Eastern Europe and Northern Africa 2002 2003 2004 3rd Consecutive Year Of Improving Financials 25
  26. 26. Asia 7 Countries 9,000 Employees 38 Locations 26
  27. 27. Asia Footprint Major presence in China, India, Korea, Japan, Thailand and the Philippines Significant infrastructure in place 7 engineering centers in the region Establishing relationships and growth through joint ventures 12 joint ventures in China 27
  28. 28. Continuing to Diversify Our Customer Mix Non-Traditional Big Three* Recent Customer Diversification VW/Audi - Seats and electronics in Europe - Audi A6: seats in China 46% Hyundai - Sonata: seats & wire harness award in NA - Several electronics awards (TPMS) in NA - Tucson: seats in Korea - Tucson/Sonata: seats in China 19% Nissan - Global seating with JV partner, Tachi-S - Electrical distribution program in Europe Toyota - Tundra: interior trim award in NA 2004 1994 - Aygo: seats (Toyota/PSA JV) in Europe * Excludes affiliates of GM (other than Opel), Ford and DaimlerChrysler. 28
  29. 29. We are Rapidly Growing Our Business in Asia and with Asian Automakers Globally* (in millions) $1,800 $1,250 $850 2002 2003 2004 Future Lear’s Asian Sales More Than Doubled From 2002 To 2004; Solid Growth Expected To Continue * Consolidated and unconsolidated sales. Please see slide titled “Forward-Looking Statements” at the end of this presentation for further information. 29
  30. 30. Major International Launches Audi A6 - China Seats BMW 3 Series SOP: 1Q 2005 Seats, Electronics SOP: 1Q 2005 Nissan Serena Peugeot 407 Coupe Electrical Distribution Seats SOP: 2Q 2005 SOP: 2Q 2005 30
  31. 31. International – 2005 Strategy Continue quality and customer service focus Execute growth priorities and ensure appropriate program profitability Implement strategic footprint plan, including the expansion of low-cost opportunities Finalize terminal and connectors business integration Utilize advance sales team and technology board 31
  32. 32. Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results. Actual results may differ materially from anticipated results as a result of certain risks and uncertainties, including but not limited to, general economic conditions in the markets in which the Company operates, fluctuations in the production of vehicles for which the Company is a supplier, labor disputes involving the Company or its significant customers or suppliers or that otherwise affect the Company, the Company’s ability to achieve cost reductions that offset or exceed customer-mandated selling price reductions, the outcome of customer productivity negotiations, the impact and timing of program launch costs, the costs and timing of facility closures, business realignment or similar actions, increases in the Company’s warranty or product liability costs, risks associated with conducting business in foreign countries, competitive conditions impacting the Company’s key customers, raw material cost and availability, the Company’s ability to mitigate the significant impact of recent increases in raw material, energy and commodity prices, the outcome of legal or regulatory proceedings to which the Company is or may become a party, unanticipated changes in free cash flow and other risks described from time to time in the Company’s Securities and Exchange Commission filings. This presentation also contains information on the Company’s sales backlog. The Company’s incremental sales backlog reflects: anticipated net sales from awarded new programs, less net sales from phased-out and cancelled programs. The calculation of backlog does not reflect customer price reductions on existing or newly-awarded programs. The three-year backlog may be impacted by various assumptions embedded in the calculation, including vehicle production levels on new and replacement programs, foreign exchange rates and the timing of program launches. In addition, the full-year 2005 per share earnings guidance is based on an assumed 73 million shares outstanding, including 4.8 million shares related to the outstanding contingently convertible debt. The forward-looking statements in this presentation are made as of the date hereof, and the Company does not assume any obligation to update them. 32

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