THE DAY AT A GLANCE

• Sellers “bite the bullet”
• Texas plunge to $51.50-$53.00
• Branded Steers $55.00
• Colorados $52.00-$53.00
• Butts $58.00-$59.00
• Native steers $63.00
• Naive heifers $49.00-$52.00
• Branded cows $32.00
• Dairy cows $49.00
• Lear Corp posts gains
• Combined outstanding 4,033,100
• Combined export sales 563,500
• Combined shipments 465,400
• Today’s trend: Searching for a bottom

HEAVY TEXAS STEERS

1. 62/64 lbs. sold at $53.00.
2. An unconfirmed sale was seen at $56.00 on 72//74 lbs.
3. 72 lbs.and up sold at $62.00
4. A sale of 62/64 lb. was heard at $51.50, calculated from a $56.50 c&f price.

BRANDED STEERS

1.  62/64 lbs. were posted at $55.00.
2.  A trade of seasonal weight Colorados was heard at $53.00.

BUTT BRANDED STEERS

1. Seasonal weights traded at $59.00
2. 62/64 lbs. traded at $58.00.
3. A $52.00 trade was posted on 60/64 lb. Colorados

HEAVY NATIVE STEERS

1. Seasonal weights sold for $63.00

HEIFERS

1. 48/52 lbs. natives traded at $52.00.
2. Another sale on 48/50 lbs. was posted at $44.50
3. Natives were heard on seasonal weights at $49.00

PLUMP COWS

1. River area brands were posted at $32.00 on seasonal weights
2. Natives were heard at $37.00 but could not be confirmed

HOLSTEINS

1. Native cows 48-52 lbs. traded at $49.00.

LOW GRADES

1. Packer thirds sold at $34.00

INDUSTRY NEWS

Lear Reports Record Q2 2017 Sales and Earnings

PRNewswire

Lear Corporation, a leading global supplier of automotive seating and electrical systems, today reported record sales and earnings for the second quarter 2017.  Highlights include:

• Sales of $5.1 billion, up 8% from a year ago; up 10% excluding the impact of foreign exchange
• Net income of $312 million, up 10% from $282 million in the prior year
• Core operating earnings of $439 million with a margin of 8.6%, up from 8.4% a year ago
• Increased sales and improved margins in both business segments
• Completed acquisition of Grupo Antolin’s seating business
• Increasing full year outlook based on strong first half performance, the addition of Grupo Antolin’s seating business and our outlook for the rest of the year

“In the second quarter, we continued to grow our sales faster than industry production, improve our operating margins in both segments and achieve record overall financial results.  Accordingly, we are increasing our full year outlook for sales, earnings and free cash flow,” said Matt Simoncini, Lear’s president and chief executive officer.  “With our unique product capabilities, industry-leading cost structure and record backlog, we are well positioned to continue to gain market share and grow our earnings.”

Sales in the second quarter increased 8% to $5.1 billion.  Excluding the impact of foreign exchange, sales were up 10%, with growth in all regions.  The increase reflects the addition of new business in both of our product segments and the acquisition of Grupo Antolin’s seating business.

Core operating earnings were $439 million, or 8.6% of sales, reflecting the increase in sales and favorable operating performance.  In the Seating segment, margins and adjusted margins increased to 8.0% and 8.4% of sales, respectively.  In the E-Systems segment, margins and adjusted margins increased to 14.2% and 14.9% of sales, respectively.

In the second quarter of 2017, net cash provided by operating activities was $566 million, and free cash flow was $413 million.

Acquisition of Grupo Antolin’s Seating Business

On April 28, 2017, Lear completed the acquisition of Grupo Antolin’s seating business, with operations in five countries in Europe and North Africa.  Grupo Antolin’s seating business is comprised of just-in-time seat assembly, seat structures & mechanisms and seat covers and is well positioned among the largest European automakers, including Daimler, Peugeot Citroën, Renault Nissan and Volkswagen.

Grupo Antolin’s seating business has modern facilities and a reputation for strong engineering and product development capabilities, lean manufacturing and superior quality.  Grupo Antolin’s product capabilities, including flexible and light weight seat designs, are an excellent complement to Lear’s existing seating business.

Full Year 2017 Financial Outlook

Lear is increasing its full year 2017 financial outlook for sales, earnings and free cash flow based on our strong first half performance, the addition of Grupo Antolin’s seating business and our outlook for the remainder of the year.

The current outlook is based on a global industry production assumption of 93.1 million vehicles, up 2% from 2016.  On a regional basis, vehicle production is forecasted to be 17.4 million units in North America, down 2%, 22.9 million units in Europe and Africa, up 3% and 26.0 million units in China, up 1%.  Lear’s financial outlook is based on an average exchange rate of $1.12/Euro for the remainder of the year.

Sales in 2017 are expected to be approximately $20 billion, and core operating earnings are expected to be about $1.65 billion.  Capital spending is expected to be $560 million, up $10 million from our prior outlook primarily reflecting the addition of Grupo Antolin.

 
 

EXPORTS

Raw hide sales down 4%

Net sales of 407,900 pieces reported for the week ending July 20 were down 4 percent from the previous week’s 426,200, but up 9 percent from the prior 4-week average. Two weeks ago sales were 317,100.
Destinations were:

 
Shipments of 343,600 pieces reported the period, all whole cattle hides, were down 15 percent from the previous week’s 402,800 and 7 percent from the prior 4-week average. Two weeks ago shipments were 291,600.

Wet blue sales up 21%

Net sales of 155,600 wet blues for the week ending July 20 were up 21 percent from the previous week’s 128,600 and 31 percent from the prior 4-week average.

Destinations were:

 
Shipments of 121,800 wet blues for the period were up 10 percent from the previous week’s 110,700 and 16 percent from the prior 4-week average.
 
 

WET BLUE SPLITS

Net sales of splits totaling 118,700 pounds for 2017 for Taiwan (100,000 pounds) and South Korea (21,000 pounds), were partially offset by reductions for China (2,300 pounds).  Exports of 86,700 pounds for 2017 were up noticeably from the previous week, but down 62 percent from the prior 4-week average.  The destinations were China (81,700 pounds) and South Korea (5,000 pounds).

 
 

MARKET OBSERVATIONS

Today’s trend: Searching for a bottom

1. Some much lower price reports today were met not with incredulity but almost resignation. Some felt that the market was headed to these levels eventually.
2. Overall, most commented that the prices they were hearing in discussions were low. One comment was that it is not a good time to be selling hides.
3. Many in the trade sense or have heard that some good volume of Texas and other selections were booked over night at the “discounts” reported above.  The question is: Did producers sell enough to stem the flow of lower prices and “buy” some forward sold positions, or are are there still too many hides needing to be sold.

FEDERALLY INSPECTED SLAUGHTER

Wednesday’s slaughter included 95,000 steer/heifers and 24,000 cows/bulls.

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PRICES AT THE CLOSE OF TRADING TODAY