Negative performance in Seating affects Adient’s results

Worldwide
Published:  11 February, 2019

The U.S. headquartered automotive seating and components supplier has posted a loss of US$17 million in the first quarter of the Company’s fiscal 2019, ending December 31, 2018.

According to Adient, seating volume and complexity of launches in North America have weighed on the results. The Company’s GAAP net loss and EPS diluted in the first quarter of the Company’s fiscal 2019 were US$17 million and US$0.18, respectively, with an adjusted-EPS diluted of US$0.31. Adjusted-EBIT and adjusted-EBITDA stood at US$105 million and US$176 million, respectively, with free cash flow (operating cash flow, less capital expenditures) totalling US$272 million.

During its Q1 2019 presentation, Adient said the main factors behind the year-on-year decline were the negative business performance within Seating (primarily launch related), temporary SG&A (Selling, General & Administrative) benefits recognised in the previous year that did not repeat, and a decline in equity income. In Seating, adjusted EBITDA totalled US$261 million in the first quarter, down US$93 million year-on-year. According to the supplier, there was a negative operating performance (cost of inefficient operations) and an increased freight and operational waste, such as scrap and cost of poor quality.

Adient says it will re-direct resources “to focus on problem plants and eliminate operational waste” and eradicate “distractions outside of core business”. Macro factors, including the negative impact of foreign exchange and increased commodity costs, are also said to have weighed on the quarter.

In its outlook for full 2019, the Company expects a year-on-year decline in revenue, primarily driven by foreign exchange rates, softer market conditions in China and a reduction in complete seat business in Europe. It also expects to see an improvement in second half results compared with the same period in the previous year.