Lear (LEA) Morgan Stanley's 14th Annual Laguna Conference summary

Business performance and growth

• H1 revenue reached a record $12B+; EPS increased 23%, while core operating income improvement and IDEA manufacturing transformation continued.

• Growth awards included Ford F-250/F-350, Audi and the largest India win to date, with Mahindra; recent wins reflect selective customer and program choices.

• Net new awards totaled $2.9B: $2.3B in Seating and more than $500M in E-Systems; 45 contracts support the technology-led differentiation strategy.

• Programs launching in 2028-2029 build on investments in IGB, Kongsberg, WIP Automation, Palantir partnerships and BMW automated taping, which starts later this year.

Third-quarter and inflation outlook

• Q3 framework remains revenue of $5.8B-$5.9B, Seating margins in the low-to-mid 6% range and E-Systems margins in the low 4% range; revenue is tracking near $5.8B.

• North America demand remained resilient; China retail sales fell 21% in July and 23% in August, pressuring regional volumes.

• Pass-through mechanisms largely insulate direct inflation impacts; current inflation dynamics are not expected to affect the H2 outlook.

China strategy and customer mix

• Domestic Chinese business is 45%, with a target of 50% next year; COEM revenue rose from 33% to 44%, with a line of sight to more than 50%.

• Domestic Chinese relationships and local teams have driven share gains, including leadership in luxury and strength in the mid-to-upper market; $520M of net new awards came from domestic COEMs.

• Export exposure is currently under-indexed; rising mid-to-high-end exports could create opportunity, while localization varies by region and policy conditions.

• New Chinese customer wins are expected to continue through the rest of this year and into next year; Leapmotor South America illustrates capital-light localization using existing capacity.