Lear Corp. is getting ready for a possible financial downturn by persevering with to chop headcount and consolidate manufacturing crops, executives mentioned Tuesday, because the seating and electronics provider reported second quarter internet revenue plunged by 60 per cent.

The corporate’s internet revenue dropped to $69 million (all figures in USD) for the quarter, however gross sales outperformed international business manufacturing and have been up seven per cent from final yr to $5.1 billion, in accordance with its quarterly earnings report.

Regardless of recession worries, CEO Ray Scott mentioned Lear has pushed by the darkest days of the COVID-19 pandemic and provide chain snarls and are available out leaner and extra versatile.

“I really feel like we have been, notably the availability base, in a recession for 2 yr …,” Scott mentioned Tuesday on a name with buyers. “For the reason that starting of COVID … we had been benefiting from the downturn to concentrate on strengthening our product portfolio, our expertise and our stability sheet.”

To take care of “operational excellence,” Scott mentioned the corporate has lately diminished non-manufacturing, salaried headcount by about three per cent and is working to make additional reductions to chop prices. The worldwide restructuring, which started early final yr, places the corporate in higher place to face up to financial pressures, in accordance with the CEO.

“As we weigh these dangers and alternatives, we proceed to take aggressive steps to place Lear to handle in all eventualities and to enhance our aggressive place and monetary efficiency,” Scott mentioned.

Lear declined to say what number of jobs have been reduce or the place.

The corporate employs greater than 160,000 individuals globally, in accordance with its web site.

It mentioned in Could it reduce headcount by 7,700. On the Tuesday earnings name, Scott mentioned Lear would consolidate manufacturing operations in Mexico and Morocco after doing so efficiently in South America.

The corporate’s core working earnings for the quarter fell 20 per cent to $187 million within the second quarter, whereas earnings per share decreased 60 per cent to $1.14. Free money circulate was detrimental $161 million within the second quarter, in comparison with identical time final yr when it was optimistic $120 million.

Commodity prices and manufacturing shutdowns continued to hamper Lear, as they’ve just about all suppliers, although Lear executives mentioned circumstances are bettering considerably.

“So far as the collaboration (with prospects), it is far more everlasting and stuck inside the value going ahead,” Scott mentioned. “De-risking the copy is one thing that we take as a precedence to ensure that we’re getting the contracts up to date to the elevated price pressures that we’re seeing.”

Whereas the hovering value of oil has elevated transportation prices, the prices of different commodities, together with metal, have fallen again to earth after painful peaks final yr.

“The commodity will increase, it is superb how rapidly that is circled,” Scott mentioned. “All this stuff that have been important headwinds turn into tailwinds.”

Lear CFO Jason Cardew mentioned the corporate’s actions to scale back SG&A (promoting, normal and administrative) bills will end in annual financial savings of $35 million to $40 million.

“Along with that, we do see different alternatives that we’re exploring that can doubtless occur on the tail finish of this yr, starting of subsequent yr,” Cardew mentioned.

For its full yr monetary outlook, the corporate narrowed its vary however maintained its midpoint, with projected internet gross sales of $20.6 billion to $21.1 billion and adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation and amortization) of $1.41 billion to $1.51 billion.

Scott mentioned the corporate is in stable form even when automotive manufacturing stays flat resulting from microchip shortages or waning demand.

“So, I believe even when volumes do not essentially enhance, however we now have a extra regular, steady atmosphere with lowering prices, that might considerably assist our margin profile,” he mentioned.

Lear, primarily based in suburban Detroit, ranks No. 10 on the Automotive Information 2022 checklist of the prime 100 international suppliers with worldwide gross sales to automakers of $19.3 billion in 2021.