Lear Siegler said Wednesday that earnings for its current fiscal quarter and year will be “substantially” less than many Wall Street analysts have been predicting, an announcement that shocked analysts and sent the firm’s stock price tumbling by 13%.
The Santa Monica-based maker of aerospace, electronic, agricultural and automotive products said the slowing economy, farm woes and other factors will reduce earnings for its fiscal first quarter ending Sept. 30 to about $11 million, 39% below the $18 million earned in the year-ago quarter.
Analysts had been expecting higher earnings, with Standard & Poor’s predicting a first-quarter net of about $19.2 million and Value Line forecasting about $20.9 million.
Better Than 1984
Full-year earnings are expected to be “somewhat below” the record $100.7 million that it earned in fiscal 1985 although better than the previous record of $85.1 million in fiscal 1984, Lear Siegler said.
Analysts had been expecting profits between about $112.5 million and $117.2 million this year.
Lear Siegler’s stock promptly plummeted $7.125 per share to close at $47.50.
“The announcement was a matter of credibility,” Lear Siegler spokesman Jack E. Cressman said. “We want to be sure that estimates on the Street are not too high, and they were. So we had to let people know.”
The firm attributed the disappointing outlook to “a general slowing of the economy, the agricultural depression, delays in shipments caused by tightened government contracting procedures, weakness in the general aviation market and increased product liability insurance.”
Cressman said that the firm had not been misleading analysts about its problems but added that the slowing of the economy and other negative factors “have become more pronounced recently.”
He said no particular unit of the firm was suffering disproportionately. The firm’s Piper Aircraft unit, acquired as part of Lear’s takeover of Bangor Punta, still remains in the red but has shown improvement, he said.